Overview

• The bill grants a monthly tax exemption of up to €2,000 for income from dependent employment after reaching the statutory retirement age, with social insurance contributions still due.
• Self-employed, civil servants and farmers are excluded, and the tax-free earnings are not subject to the progression clause; the relief is applied directly via payroll.
• The government projects about 168,000 users and annual tax revenue losses of roughly €890 million, shared by federal, state and municipal budgets.
• Entry into force is planned for 1 January 2026, with a two-year evaluation and a report to the Bundestag by the end of 2029 on labour-market effects and potential inclusion of the self-employed.
• The proposal faces pushback from self-employed groups and dissent among younger CDU/CSU MPs, as the coalition moves the wider pension package— including a 48% pension-level hold to 2031—into Bundestag debate starting Thursday.