Merkel is due to discuss lockdown and easing options with the 16 state heads on Wednesday, as coronavirus cases in Germany hit more than 2.4 million and public frustration mounts over restrictive measures and a sluggish vaccine roll-out.
The draft document, seen by Reuters, states that starting from March 8 a maximum of five people from two households, excluding children younger than 14, will be allowed to meet, up from a maximum of two people under current rules.
Flower and book stores, garden centres, tatoo and nail parlors as well as massage salons will also be allowed to reopen.
Merkel and state leaders will have to decide at which 7-day incidence rate per 100,000 residents measures could be either toughened or eased. The document cited 35 and 50 as two likely possibilities.
With Easter approaching, the draft agreement also appeals to Germans to avoid domestic and foreign travel, adding, however, that limited visits to relatives will be allowed over the festive days.