Income tax is due even on small pensions
The taxation of pensions was changed with a reform. The result: Income tax is now due on even a small pension. The Bundestag member Sahra Wagenknecht is calling for an abolition of up to the sum of 2,000 euros.
SEven with very small pensions, income tax is now due. For example, anyone who retired in 2023 and received a net payment of 1,300 euros per month would pay 127 euros annually to the tax authorities. If you pay 1,500 euros per month, the annual taxes are 463 euros, and if you pay 1,800 euros per month, this is already 1,098 euros. The figures come from a response from the Ministry of Finance to Bundestag member Sahra Wagenknecht, which is available to the German Press Agency.
The taxation of pensions was changed in a reform in 2004. Gradually, an increasingly larger part of the pension becomes taxable, while contributions during the working phase are made tax-free. This means: Older pensioners are not affected by taxation, or not as much. For example, anyone who retired by 2015 and now receives 1,300 euros net per month pays no income tax – unlike new retirees in 2023. For future retirees, the tax burden will continue to grow gradually.
“Pension taxation should be abolished for pensions up to 2,000 euros,” demanded Wagenknecht. “If new pensioners have to pay several hundred euros more in taxes than older people for the same pension level, even though they generally receive less pension, then it shows that the problem is getting worse.” This even affects pensions on which one can barely live on could. “It is absurd to tax pension levels that are already far too low,” said Wagenknecht.
The chairwoman of the new alliance, Sahra Wagenknecht, recently asked about the total amount of taxes and social security contributions for pensioners: it has increased in recent years and is expected to reach a good 124 billion euros in 2024. This includes 54.3 billion euros in contributions for statutory health insurance and 11.5 billion euros for nursing care insurance.
The ministry’s response to Wagenknecht’s new request shows that social security contributions have increased not only in total, but also for individual pensioners. In 2005, seniors had a contribution of 8.85 percent of their salaries; since July 2023 it has been 11.5 percent.
When it comes to taxation information, please note: The ministry stated the payment amounts net, i.e. the sum after deducting taxes and duties. According to the information, 1300 euros net corresponds to 1470 euros gross. At 1200 euros net or less, no income tax is currently due.