Overview

• Working pensioners in social‑insurance employment can earn up to €2,000 per month tax‑free from 1 January 2026, with the allowance applied directly through payroll withholding.
• The Progressionsvorbehalt is removed for these earnings, but health and long‑term care contributions continue to apply, and employers must still pay unemployment and pension contributions.
• Self‑employed, freelancers and tradespeople are excluded at launch, prompting legal‑equality and fairness objections from groups such as the VGSD and criticism from union representatives.
• A government draft estimates recurring tax shortfalls of about €890 million annually, split between federal (€387m), state (€378m) and municipal (€134m) budgets.
• The draft includes a two‑year review clause with the option to consider extending the benefit to freelancers, and the legislation still needs to pass Parliament this year.