despite recent tax cuts, their net salaries will be lower.. New calculations by the Nuremberg-based software firm Datev and reported by the Süddeutsche Zeitung, reveal that the anticipated benefits of the tax reductions are proving largely illusory, particularly for lower and middle-income earners.
Datev’s analysis indicates that many employees will see only a marginal increase in their net income in 2026, even within salary brackets up to €5,500 per month. While beneficiaries exist – notably single individuals earning €5,500 – their gains are modest, capping around €64. Conversely, those earning above this threshold will experience a noticeable increase in deductions, effectively negating any perceived advantage from the tax reforms.
The primary drivers behind this disappointing outcome are twofold: mandatory increases in contributions to the statutory health insurance system and a reinstatement of higher ceilings for social security contributions. Datev processes payroll for approximately 14.7 million German employees each month and its calculations highlight that the rising health insurance supplementary contribution is particularly impactful on lower-income households.
For instance, married couples with a combined gross monthly income of just €2,000 to €2,500 could even see a net decrease in their income due to the health insurance surcharge, as the lower income bracket is already exempt from income tax, rendering the tax breaks essentially ineffective.
The impact on higher earners is even more pronounced. Individuals earning above €5,500 and especially those surpassing €8,000 per month are experiencing significantly higher deductions. A single mother with one child earning €6,000 a month is reportedly losing €177 annually due to the increased contribution limits. Couples earning €9,000 a month face the steepest declines, with an estimated shortfall of €464 (without children) or €442 (with two children) in the new year. This reflects a sharp increase in contributions for both unemployment and pension insurance stemming from the higher assessment limits.
The situation raises critical questions about the effectiveness and distribution of the government’s tax relief measures. While hailed as a way to stimulate the economy and ease the burden on taxpayers, the reality is that many Germans are effectively shouldering a heavier financial load, while the intended benefits largely fail to materialize. The findings underscore a growing disconnect between political rhetoric and the lived experience of working-class citizens, prompting renewed scrutiny of the government’s social welfare policies and their actual impact on household finances.
