Germany Approves 2026 Tax Changes Boosting Commuter and Volunteer Breaks for Retirees

Overview

• The Steueränderungsgesetz 2025 cleared the Bundestag on 4 December and the Bundesrat on 19 December, with most provisions dated 1 January 2026 and formal publication still pending.
• From 2026 the commuter allowance is unified at €0.38 per kilometre from the first kilometre, and the mobility premium is made open-ended for low-income long-distance commuters, typically requiring a tax return and a separate application.
• Volunteer allowances rise for the 2026 assessment year, with the Übungsleiterpauschale increasing to €3,300 and the Ehrenamtspauschale to €960, alongside clarifications intended to reduce disputes over tax-free treatment.
• Core pension taxation remains unchanged, but retirees with side jobs gain from new deductions and allowances, including a reported rule allowing union dues to be claimed as deductible expenses in addition to the employee lump sum.
• Broader 2026 consumer and labor rules reported for the year include a planned minimum wage increase to €13.90 per hour and an expected cut of VAT on restaurant food to 7 percent, plus a new e‑car purchase incentive under discussion for early 2026.