Overview

• The Bürgergeld will be replaced by a new basic benefit system featuring a sanctions cascade: a 30% cut after a second missed Jobcenter appointment and a full cash suspension after a third, with housing payments also halted the following month if the person remains unreachable, subject to hardship exceptions.
• Labor‑market rules will tighten as Vermittlungsvorrang is reinstated and asset protections are narrowed by scrapping grace periods and linking allowable savings to age and contribution history.
• Chancellor Friedrich Merz insisted no one will be left without shelter, while SPD youth and left‑wing lawmakers, trade unions and social groups warn of risks up to homelessness and potential violations of the constitutional right to a subsistence minimum.
• Coalition leaders outlined a rapid timetable: the Aktivrente allowing retirees to earn €2,000 per month tax‑free goes to cabinet on October 15, with the wider package headed for a Bundestag vote in early 2026 and entry into force by spring 2026.
• Officials caution that direct budget savings from tougher sanctions will be small, legal challenges are expected referencing a 2019 Constitutional Court ruling, and the deal also includes new EV purchase subsidies and a €3 billion reallocation to road construction.