In 2025, approximately 22.5 million people in Germany received pension payments totaling around 423 billion euros through statutory, private, or occupational schemes. According to data released by the Federal Statistical Office (Destatis) on Tuesday, the number of pension recipients increased by 0.8 percent, or 168,000 people, compared to the previous year. Concurrently, the total amount of these benefits rose by 5.1 percent, amounting to 20.7 billion euros.
In 2025, 72 percent of these benefits-equating to 304 billion euros-were classified as taxable income. Since 2015, the average rate of taxation on these incomes has consequently risen by 16.4 percentage points. This annual increase in the tax rate is primarily due to the restructuring of old-age income taxation mandated by the 2005 Old-Age Income Act. A central element of this reform involved shifting the taxation of statutory benefits from a pre-payment (accrual) model to a post-payment (disbursement) model. During the transition period, pension contributions were gradually exempt from tax, and only the benefits received upon withdrawal became subject to taxation.
The percentage of pension income that is taxable depends on the year the pension started; the later the retirement begins, the higher the taxable share of the income. Furthermore, general increases in pensions are entirely subject to taxation. The implementation of the Growth Opportunities Act on March 27, 2024, extended the initial transition period, which was planned until 2040, now until 2058. Only from that date will new statutory pensions be fully subject to income tax.
For many retirees, the taxable portion of their pension, after relevant deductions, falls below the annual basic tax-free allowance. Therefore, many pension payouts remain tax-free, provided they do not have other sources of income. Due to the extended timelines for tax assessments, the specific number of retirees who will pay income tax in 2025 is not yet known.
Data currently available on pension taxation is from 2022. In that year, approximately 42 percent-or 9.34 million-of the total 22.03 million beneficiaries were required to pay income tax. This reflected an increase of 1.8 percentage points, or 442,000 people, compared to 2021. Statisticians noted that among 80 percent of the recipients who were subject to taxation in 2022 (including surviving spouses and children), they also had other earnings, such as care benefits, employment income, or rental income. In cases where spouses file jointly, these reported earnings can also include the income of the partner, which is aggregated for tax purposes.
