How much pension can you receive without paying taxes? - Germany's New Retirees Face 83% Pension Taxation
In 2024, new retirees in Germany saw 83 percent of their gross pension subject to taxation by the IRS. This change, part of the Growth and Chance Law, has altered the tax landscape for pensioners. Previously, new retirees could receive up to 16,243 euros in annual gross pension without tax. However, with the new regulations, they must pay tax on 83 percent of their pension, with only 17 percent remaining tax-free. Retirees can still deduct various allowances and provisions from their taxable income. In 2024, new retirees could deduct 1,971 euros through allowances and provisions. This includes the advertising cost allowance, special expenses allowance, and retirement provisions. For couples, the tax-free annual gross pension amount doubles to 32,486 euros. However, by 2025, the tax-free allowance for retirees reduces to 12,084 euros, above which taxation generally applies. Long-term retirees who started receiving their pension in 2005 have different tax rules. They can receive 50 percent of their pension income tax-free. Older retirees from this cohort could receive up to 19,758 euros without becoming liable for tax. Retirees with more than 11,604 euros in pension income in the previous year (2024) generally have to file a tax return. The full taxation of pensions will come into effect in 2058. From then on, pensioners starting their pension that year or later will have to pay taxes on 100 percent of their pension income. This gradual shift in tax policy aims to balance the needs of retirees with the financial requirements of the country.
