Overview

• Ministers approved a bill enabling people past the statutory retirement age to earn up to €2,000 per month tax-free from dependent employment starting January 1, 2026, pending Bundestag passage.
• The allowance is processed via payroll, is exempt from the progression clause, and does not waive social insurance contributions, which remain due for health and long-term care and on the employer side for pension and unemployment.
• The exemption applies only to taxable wages from jobs where employers pay into the statutory pension system, excluding the self-employed, civil servants, farmers and minijobbers.
• The Finance Ministry projects about 168,000 users annually and foresees roughly €890 million in yearly revenue losses shared by federal, state and local budgets.
• SPD leaders insist the cabinet text be maintained as young CDU/CSU MPs and self-employed groups protest, including a petition alleging unequal treatment, while the bill moves to the Bundestag and is slated for government evaluation by 2029.