A new analysis by Datev, a German software company, suggests that many employees in Germany will see a decrease in their net pay this year. According to the company, which processes payroll and salary calculations for over 14 million workers, a significant increase in social insurance contributions will lead to a near-constant additional burden on dependent workers.
Even the recently passed tax cuts, which are expected to be reflected in paychecks and pay slips from February or March 2025, are not enough to offset the higher contributions to health and long-term care insurance and the increased taxes resulting from the 2025 social insurance contribution ceiling increases.
Datev’s experts have calculated the net difference in take-home pay for individuals with the same income in 2024 and 2025. Those with a gross income of up to €5,000 per month will still fare relatively well, with a single person in tax class I without children, for example, having €28 less in their annual disposable income. However, for higher earners, the impact of the increased contributions is more pronounced, particularly for those with gross incomes of €5,500 and above, where the effects of the increased contribution ceilings become apparent.
According to Datev, this effect will particularly affect workers who are now required to pay social insurance contributions on their full salary for the first time. For example, a married couple with a gross income of €8,500 per month, without or with two children, will see a net decrease of €658 or €633, respectively, over the course of the year.