The bad news for retirees: increases in pensions are becoming a tax trap

  • More money for retirees: The biggest a pension increase has been around for decades from 1 July 2022 obligatory
  • pension increases significantly – for some it also means that taxable will be
  • Different payout time: Not all retirees receive money at the same time
  • That’s why some seniors get their money later

Retirees in Germany can be really happy: pensions end on July 1 5.35 percent in western Germany and 6.12 percent. in eastern Germany. This means that the pension based solely on Western contributions will now increase from EUR 1,000 to EUR 1,053.50. One, based solely on eastern contributions, increases from the previous EUR 1,000 to EUR 1,061.20. It gives seniors the greatest increase in decades before. For some retirees, however, this also means that from now on they will: Tax office asked to pay will be. Moreover, not everyone gets money at the same time.

Not paid at the same time: When will you get a pension increase?

Pensions are paid every year July 1 adjusted according to wage changes. In the event of a decrease in wages, the existing pension guarantee also prevents a decrease in pension benefits. In the worst case, there will be zero rounds like last year. FROM catch-up factor it should mathematically compensate for this impossible reduction in pensions when wages rise again, which is why the increases in pensions are lower.

The grand coalition has suspended the catch-up factor, and now it is being reinstated. That Increase in spite of the catch-up rate such a large result is due to good development on the labor market and the related wage development.

When your pension is paid depends on: retirement date from: Anyone who has retired by March 2004 will receive an adjusted salary at the end of June. If your pension started in April 2004 or later, the increase will not affect your account until the end of July. However, payment is automatic – you don’t have to worry about anything.

When asked to pay: tens of thousands of retirees suddenly become taxpayers

this strong increase in pensions in 2022 it’s a satisfaction, but for some retirees, a plus also means that they will now be asked to pay by the tax office. Around 103,000 seniors slippage after rising tax liability. The Federal Ministry of Finance informed about it in April at the request of the left wing in the Bundestag. Whole EUR 730 million of additional income the state can generate from these taxes.

This is how the tax makes itself felt: For example, with a monthly pension of € 1,200, approximately 10 percent of the increase in income tax will be withheld in the future. At 1,500 euros, this is around 14 percent and at 2,000 euros it is 17 percent. Moreover, it appears high inflation and the fact that pensioners have been exempted from aid measures such as an energy bonus of EUR 300. Inflation is hitting pensioners at the lower end of the income scale particularly hard.

And watch out: In some cases Tax return required. Retirees and pensioners are usually subject to income tax if they earn income that exceeds certain exemption limits. If you stay below this level, you don’t need to file a tax return with the tax office. But it can be tricky as it will make you involuntarily tax evasion faster than you would like. Since from Pension tax reform in 2005 in the old federal states there were 15 increases in pensions and as many as 17 in the new federal states. For example, anyone who earned an average of 45 years could get their job done The standard gross pension will increase by a good 400 euros See. This could become a tax trap, especially for retirees who retired before 2005. So if you are unsure, you should urgently check yours with a specialist calculate your tax liability – in emergencies, they can also help in dialogue with the tax office.

You might also like: Find out here when you need to file your tax return and how to easily calculate your pension tax online.

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