Finance

The tax burden on pensioners has quintupled in some cases

Little tax on your pension? That was once. Pensioners sometimes pay five times as much tax as in 2010, according to a response from the Ministry of Finance to the Left Party.

The tax burden on pensioners has grown by around five times within ten years. This comes from a response from the Federal Ministry of Finance to a request from the left-wing faction, which is available to the German Press Agency in Berlin. The MDR magazine “Umschau” also reported about it. Left faction leader Dietmar Bartsch criticized the increasing pension taxation as “de facto pension cut”.

  • With new pensioners, a monthly gross pension of 1,500 euros is now subject to 430 euros in income tax per year, compared to 79 euros in 2010.
  • With a gross monthly pension of 1,700 euros, 294 euros were due at the beginning of the pension in 2010, this year it is 758 euros.
  • If the earnings were 2,000 euros, in 2010 it was 679 euros in income tax, currently 1,326 euros.
  • Anyone who receives a pension of 1,200 euros will therefore only pay income tax from this year – namely 31 euros.

The background is a change introduced in 2005

Until 2005, there was an allowance of 50 percent of the pension. Since then, the tax portion of the pension has initially increased by two percentage points annually. By this year the allowance had dropped to 22 percent. In return, pension contributions have been deducted more and more from taxable income since 2005. Health and nursing care insurance contributions and some everyday expenses can also be claimed.

The tax is due when the total income of a pensioner is above the basic allowance (EUR 9,168). The average pension in 2018 was 1,219 euros.

Bartsch continued: “In the next few years, the tax burden for small and medium-sized pensions will continue to increase.” He asked Finance Minister Olaf Scholz and Labor Minister Hubertus Heil (both SPD) to present a concept with significantly higher allowances that protect small and medium-sized pensions.

In 2015, a total of around EUR 34.65 billion in income tax was paid to the state by taxpayers with pension income.

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