Economy From July 1st
More than 100,000 seniors are subject to tax as a result of pension increases
Status: 30.06.2023 | Reading time: 2 minutes
Pension increases in the West by 4.39 percent, in the East by 5.86 percent
Inflation is also affecting many pensioners. As of July 1, pensions will increase by 4.39 percent in western Germany and by 5.86 percent in the new federal states.
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Thousands of pensioners will have to pay income tax from July. The reason is the pension increase. According to the Treasury Department, six million pensioners currently have to pay taxes. 66 percent or two-thirds of pension benefits in 2022 were taxable.
Due to the increase in statutory pensions on July 1, more than 100,000 retirees will be subject to income tax. According to a report by the Funke media group on Thursday, the Federal Ministry of Finance assumes that the number of taxable pensioners will increase by 109,000 as a result of the adjustment.
Accordingly, the ministry also emphasized that, conversely, the increase in the basic tax allowance to EUR 10,908 on January 1, 2023, i.e. half a year ago, eliminated a total of 195,000 retirees from tax liability. In total, almost six million people with pension income are subject to tax in Germany.
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66 percent or two-thirds of pension benefits in 2022 were taxable. Since 2015, the share of taxation has increased by 11 percentage points.
Relief packages also help pensioners
According to the Funke newspapers, the Ministry of Finance also assumes that the increase in pensions will increase the state’s tax revenue by 660 million euros. Due to the adjustment of the tax rate 2023 as part of the relief packages, pensioners would in turn be better off by almost two billion euros.
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The statutory pensions of around 21 million retirees will rise sharply on July 1: the plus is 4.39 percent in the west and 5.86 percent in the east. However, this will probably not be enough to compensate for the rapid increase in the cost of living. Economists expect an inflation rate of around six percent for this year.
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