In 2024, approximately 22.3 million people in Germany received pension benefits totaling around 403 billion euros.
According to data released Friday by the Federal Statistical Office, the number of pension recipients increased by 0.75 percent, or 167,000 individuals, compared to the previous year. The total value of these pension payments rose by 5.7 percent, representing an increase of 21.7 billion euros. Around 70 percent of these payments – some 282.6 billion euros – were subject to income tax, a rise of approximately 15 percentage points since 2015.
This increase in the proportion of taxable pension income is linked to revisions in the taxation of retirement income introduced by the Income Tax Act of 2005. A key element of this reform involved transitioning from upfront taxation of contributions to downstream taxation of benefits. During a transitional phase, contributions to the statutory basic pension scheme became progressively tax-exempt, with benefits being taxed upon disbursement.
The taxable portion of pension income is determined by the year the pension payments begin. Later commencement dates correspond to a higher proportion of taxable pension income. Moreover, general pension increases also contribute to a higher taxable share, as these increases are fully subject to income tax. The Growth Opportunities Act, enacted on March 27, 2024, extended the transitional phase – initially planned to conclude in 2040 – to 2058. Only from this date onward will newly established statutory pensions be fully subject to income tax.
Many pensioners find that the taxable portion of their pension, after applicable deductions, falls below the annual tax-free allowance, resulting in tax-free payments if no other income sources exist. Current data on the number of pensioners subject to income tax for 2024 is not yet available due to the time required for tax assessment.
The most recent comprehensive data, covering 2021, reveals that around 41 percent, or 8.9 million, of the total 21.9 million pension recipients paid income tax. This represents an increase of 0.74 percentage points, or 214,000 individuals, compared to 2020.
Among those taxed in 2021 – including surviving spouses and children – approximately 81 percent also received additional income such as occupational pensions, earned income, or rental income. In the case of jointly assessed married couples, this can also include the income of the partner, which is aggregated for tax purposes, according to the Federal Statistical Office.