A significant number of high earners in Germany are facing a reduction in their net income next year, a consequence of rising healthcare contributions and adjustments to social security thresholds. Calculations by the German Taxpayer Association (Bund der Steuerzahler), reported by “Bild”, indicate that individuals earning above €5,500 gross per month could see their take-home pay decrease by up to €502 annually.
Conversely, employees earning less than €5,500 monthly are anticipated to experience a marginal increase in their net income, attributable to higher basic tax allowances and measures implemented to counteract the effects of ‘cold progression’ – the phenomenon where tax burdens increase with income even without a corresponding rise in real income.
The situation has drawn sharp criticism from Reiner Holznagel, President of the Bund der Steuerzahler. He accused the ruling coalition government of delivering a “disappointing” outcome for workers. “The grand coalition is causing a significant disappointment regarding net wages” Holznagel stated. He further emphasized the urgent need for substantial relief, advocating for action to be taken by 2027 at the latest.
Highlighting a key point of contention, Holznagel pointed to the coalition agreement, which delays a comprehensive income tax reform until the middle of the legislative term. “If that’s meant seriously, something needs to happen in 2026” he asserted, effectively signaling a looming political pressure point for the government to address the growing public concern over the erosion of disposable income amongst higher earners. Analysts suggest that the delayed reform and subsequent financial strain on a segment of the workforce could intensify debates surrounding income inequality and the overall fairness of the German tax system.
