A series of financial and social changes are set to take effect in the new year, impacting workers, families, and consumers. These adjustments range from increases to the minimum wage and child benefits to changes in social security contributions and consumer protections.
Minimum Wage and Low-Wage Employment
Good news for low-wage earners: the minimum wage will increase to 13.90 euros on January 1st, up from 12.82 euros. A further increase to 14.60 euros is planned for 2027. Simultaneously, the earnings threshold for “mini-jobs” – a form of part-time employment – will rise from 556 euros to 603 euros per month, and is also slated to increase to 633 euros in 2027.
Social Security and Taxes
While the contribution rate to the pension insurance remains steady at 18.6 percent, changes are coming to health insurance. Several major health insurance funds are increasing their supplementary contributions at the start of the year, while the general contribution rate will remain at 14.6 percent. Higher earners will face increased costs due to rising contribution assessment ceilings. The ceiling for health insurance increases from 66,150 euros to 69,750 euros, and for pension insurance, it rises to 101,400 euros.
Taxpayers will also see adjustments. The basic tax allowance will increase by 252 euros to 12,348 euros, meaning individuals will only begin paying taxes on income exceeding this amount. Additionally, retirees receiving a pension beyond the standard retirement age will benefit from a monthly allowance of 2,000 euros, potentially allowing them to earn up to 36,348 euros tax-free.
Family Support and Daily Life
Families with children will receive a modest increase in child benefits, rising by four euros to a total of 259 euros per month. Families with higher incomes will also benefit from increased child tax credits, rising to 3,414 euros per parent, or double that amount for joint filings. Beginning in August, all elementary school students will be entitled to all-day care, though parents are not obligated to utilize this service.
Commuters will also see a benefit, with the commuter allowance increasing to 38 cents per kilometer traveled to work, even for those who cycle or walk. The allowance was previously 30 cents for the first 20 kilometers.
Consumer Protections and Food Standards
New regulations aim to improve the quality of food products. Jams will require a minimum fruit content of 45 percent, up from 35 percent, with “extra” jams needing at least 50 percent fruit. Fruit juice categories will also be revised, and honey labeling will now require indicating the country of origin – or countries of origin, if sourced from multiple locations. A reform of the consumer credit directive, expected late next year, will introduce stricter creditworthiness checks to protect consumers from over-indebtedness, particularly regarding “buy now, pay later” schemes.
Consumers will also find it easier to cancel online contracts, as providers will be required to implement a clearly visible cancellation button on their websites.
Gastronomy and Travel
The hospitality industry will receive some relief through a reduction in the value-added tax on food from 19 percent to 7 percent, though the tax on beverages will remain unchanged. The impact on dining costs remains uncertain given rising restaurant expenses. The price of the Deutschlandticket, a nationwide public transportation pass, will increase to 63 euros per month, a 5 euro increase.
Frequently Asked Questions
What is the new minimum wage?
The minimum wage will increase to 13.90 euros on January 1st, and will rise again to 14.60 euros in 2027.
How will the changes affect higher earners?
Higher earners will see increased contributions to health and pension insurance due to the raised contribution assessment ceilings.
What changes are being made to online contract cancellations?
Providers will be required to implement a clearly visible cancellation button on their websites, making it easier for consumers to cancel online contracts.
How will these changes impact your household budget in the coming year?