A proposal is gaining traction within Germany’s Christian Democratic Union (CDU) to enhance the appeal of the planned “active retirement” scheme set to launch on January 1, 2026. The core of the proposed change involves increasing the tax-free earnings threshold for senior citizens participating in the program.
Currently, the draft legislation envisions allowing retirees to earn a monthly sum of €2,000 tax-free. However, the CDU is advocating for a revision that would allow for an annual tax-free income of €36,000, equivalent to a monthly allowance of €3,000. This represents a significant increase of €12,000 compared to the current draft.
CDU member of parliament and financial expert Fritz Güntzler highlighted that the adjusted allowance would, when combined with the existing basic tax-free allowance, permit a total annual tax-free income of approximately €36,000. Furthermore, he emphasized the absence of mandatory contributions to both pension and unemployment insurance on earnings within this threshold.
The proposed change aligns with the expectations of Economics Minister Katarina Reiche (CDU), who anticipates a total annual tax-free allowance of €36,000 for individuals engaging in active retirement. The initiative aims to stimulate workforce participation among older citizens and provide greater financial flexibility during retirement. The final details are subject to ongoing discussions and legislative review.