Overview

• The agreement paves the way for a cabinet decision next Wednesday on Finance Minister Lars Klingbeil’s bill, according to WAZ.
• Retirees who work beyond the statutory retirement age would receive a €2,000 monthly tax allowance starting January 2026, pending Bundestag and Bundesrat approval.
• The progression clause will not apply, addressing warnings that it could have raised overall taxes for some pensioners despite the nominal exemption.
• The tax bonus would not cover the self‑employed, freelancers, or early retirees, as eligibility requires reaching the regular retirement age.
• The allowance is planned for an initial three years with a review to follow, and the finalized draft has not yet been published.