Overview

• Starting in 2026, the automatic 10% professional expense deduction on pensions will be scrapped and replaced by a uniform €2,000 annual allowance for all retirees.
• Retirees with annual pension income above €20,000 will face a modest rise in income tax under the new flat-rate deduction.
• Pension payouts will be frozen in 2026, suspending inflation-linked increases as part of deficit reduction efforts.
• The previous percentage-based deduction, capped at €4,123, cost the state about €5 billion annually and benefited nearly 15 million households.
• Implementation details are being drafted as unions and opposition parties challenge the plan’s impact on higher earners.