Germany’s New Law Lets Working Pensioners Keep €2,000 Monthly Tax-Free
Published on 07/28/2026 at 05:32 | Redaktion boerse-global.de
Since July 1, 2026, Germany’s Aktivrentengesetz (Active Pensioners Act) has introduced a significant tax break for retirees who continue working. Under the reform, pensioners can now earn up to €2,000 per month without paying income tax on that additional income. The measure is designed to encourage older people to remain in the workforce longer by easing their tax burden.
The law is part of a broader package of tax adjustments for 2026. The basic tax-free allowance has risen to €12,348 for single filers and €24,696 for married couples. For those receiving a pension for the first time this year, 84% of that pension is now subject to taxation. Overtime bonuses remain tax-free up to a 25% surcharge rate, provided the base hourly wage does not exceed €50. The commuter allowance has been standardized at €0.38 per kilometer from the first kilometer driven. Meanwhile, the CO? tax has climbed to €65 per tonne, and the VAT for the hospitality sector has been permanently locked at 7%. Electric vehicles continue to enjoy an exemption from vehicle tax until at least 2035.
While the Aktivrentengesetz opens new earning opportunities for retirees, a separate debate is heating up over the future of Germany’s so-called “minijobs” — low-wage positions with special tax and social security rules. The Alterssicherungskommission (Pension Security Commission) has recommended abolishing the special status of these jobs altogether. Under its proposal, minijobbers would be automatically enrolled in the statutory pension insurance system, with no option to opt out. The only exception would be for school students.
The commission’s recommendation is grounded in current labor market data. In the first quarter of 2026, Germany recorded 6.8 million minijobbers nationwide. Of those, 79.1% paid no personal contributions to the pension insurance system. To illustrate the financial impact of mandatory insurance, the commission provided a model calculation: for a monthly income of €603, the employee’s share would amount to €21.71. That contribution would raise the worker’s future pension by €5.68 per year.
Chancellor Merz has responded to the commission’s proposal by stating that the government has no plans to fully eliminate minijobs. The statement aims to reassure businesses and workers who value the flexibility these positions offer. Employer groups were quick to push back against the commission’s recommendations. Both the German Hotel and Restaurant Association (DEHOGA) and the Confederation of German Employers’ Associations (BDA) voiced strong opposition to any changes.
Beyond the new earning allowances, the law also includes a one-time opportunity for individuals previously exempted from mandatory pension insurance. Since July 1, 2026, these workers can rejoin the statutory pension system, allowing them to improve their retirement security under the updated legal framework.
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