As of: March 20, 2024, 10:03 p.m
By: Amy Walker
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Weeks ago, the federal government passed a law to relieve the burden on pensioners.
It could finally be approved by the Federal Council on Friday.
Berlin – When the Federal Council meets next Friday, March 22nd, pensioners should also hope that the Growth Opportunities Act will be passed.
Because while the main goal of the law is to relieve the burden on the economy, there is also relief for seniors.
Table shows how the tax burden should be reduced
Specifically, the aim is to prevent double taxation of pensions, which could happen to many people without new regulations.
The Federal Finance Court had already warned a few years ago that the double tax for pensioners that would take effect from 2025 might be unconstitutional.
Many pensioners would be affected by the relief.
© Geisser/imago
The background is the gradual taxation of the statutory pension, which currently means that the tax share of the pension increases every year for new pensioners.
This restructuring of the pension system resulted in double taxation.
In some cases, this means that pension contributions that have already been taxed will then be taxed again in retirement.
This particularly affects the self-employed.
For this reason, the government has decided on a new taxation model as part of the Growth Opportunities Act, in which the tax share of new pensions will only increase retroactively from this year in 0.5 percent increments instead of in 1 percent increments.
So: New pensioners should get more net than gross.
This also means that the pension payments of new retirees will be fully taxed for the first time from 2058.
Without the new regulation, full taxation of pensions would begin as early as 2040.
Start of retirement |
Taxation according to the current model |
With the new model |
2023 |
83% |
82.5% |
2025 |
85% |
83.5% |
2030 |
90% |
86.0% |
2035 |
95% |
88.5% |
2040 |
100% |
91.0% |
This can mean relief of thousands of euros for pensioners.
New pensioners who would have to pay tax on 95 percent of their pension in 2035 would only have to pay tax on 88.5 percent with the new law - that can make a significant difference.
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The CDU and CSU are blocking the Growth Opportunities Act
But it is not yet clear whether the law will actually come.
Because the CDU and CSU are blocking the Growth Opportunities Act in the Federal Council.
In return for their approval, they demand relief for farmers.
Even a few days before the Federal Council meeting, it is completely unclear whether the Union will give its approval - or whether the German economy and pensioners will continue to be put off.
The last time, when the Union's approval of the Growth Opportunities Act was rejected in February, the SPD warned against taking pensioners “hostage”.
“Since the number of cases will increase significantly from 2023, it is even more important to pass the Growth Opportunities Act as quickly as possible.
The Union
is blocking this regulation for pensioners born in 2023 and beyond,” said SPD MP Frauke Heiligenstadt to the
Berliner Morgenpost
.
“Taking pensioners hostage in this context is unacceptable.”