Germany, 2 thousand euros tax-free income for retirees who choose to work

2025-10-15 08:05:00, Kosova & Bota CNA

From 2026, Germany will keep expert retirees in the job market by allowing them to earn up to 2,000 euros per month tax-free.

Germany will introduce an "active pension" from January 1, 2026 that allows people who choose to work beyond the statutory retirement age to earn up to 2,000 euros a month tax-free.

Labor Minister Bärbel Bas defined Aktivrente as a direct incentive aimed at keeping experienced workers in the labor market.

Asked about the center-right Union's proposal for a tax-free bonus, Bas said that "anyone who voluntarily wants to work longer needs attractive conditions."

She added that the government will lift the ban on previous employment, which had prevented retirees from returning to their previous jobs.

"It is counterproductive that employees who wanted to continue working after reaching retirement age were not allowed to easily return to their old employer."

The decision comes after a tense debate in the coalition committee led by Chancellor Friedrich Merz and attended by Finance Minister Lars Klingbeil, Labor Minister Bas and Bavarian Minister-President Markus Söder.

The pension reform was agreed along with changes to Bürgergeld, Germany's basic income support for working-age adults struggling with living costs.

Tightening the scheme aims to address labor shortages and voter concerns about fairness by pushing people back into work.

Critics warn that this change could deepen hardship for needy families and mark a return to Germany's previous system, with benefit cuts that could potentially undermine a sustainable return to employment.

How does Germany's movement compare to the rest of Europe?

The monthly payment of 2,000 euros tax-free in Germany is extremely clear by EU standards.

Some member states allow or encourage work beyond retirement age, but usually through lower income tax rates for the elderly, such as Sweden's extended earned income allowance for those over 66, or bonus credits for deferred pensions such as Denmark's seniorpræmie pensions.

In most of Europe, pension deferral bonuses are the norm and retirees essentially continue to live on their previous salaries and normal tax rates./ CNA