Germany: 7 wages, tax waivers, benefit changes for current and potential residents in 2026

Germany will implement changes affecting salaries and price for goods and services that will affect long-term residents, international students, or those planning to move to the country.

Effective 2026, these legislative shifts that will impact everything from the monthly pay packet to everyday commute, impacting on daily life and income.

According to David Adade, a foreign skilled worker in Germany, these updates can be seen as “monetary manoeuvres” designed to balance the scales between rising inflation and economic stability.

The German tax system, although famously complex, will have the 2026 updates providing a rare mix of higher social security costs for high earners, but a higher tax-free buffer for everyone.

Read also:Foundation opens work opportunity in Germany for Nigerian nurses

Here are the seven shifts coming to Germany in 2026.

The minimum wage hike The national statutory minimum wage is set for a significant boost. Starting from January 1, 2026, the hourly rate will rise from €12.82 to €13.90 according to the Federal Ministry of Labour and Social Affairs

This increase is intended to ensure a fair subsistence level for the over six million workers across the country.

“If your employer is paying you anything less than that in 2026, then you have to call the police… I mean, you have to call somebody,” notes Adade.

Mini-job earnings cap increase In tandem with the minimum wage hike, the monthly earnings limit for mini-hobs will increase from €566 to €603. This allows workers to take home more pay without crossing the threshold into social security contributions.

Any earnings above this limit will transition the role into a midi-job, attracting different tax rules, according to Minijob-Zentrale.

Read also: Germany trains Nigerian youths to promote legal migration

Radical salary transparency The European Commission – Pay Transparency has said that under the new EU Pay Transparency Directive, which Germany must fully implement by June 2026, the job-hunting process is getting a makeover. Employers will be legally required to state a salary range in job advertisements.

“There’s a new law coming in place which will actually force every employer to state the range of salary… they don’t have the right to ask you how much you earned in your previous job,” Adade said.

Companies will be banned from asking candidates about their previous salary history, a move designed to close the gender pay gap.

Kindergeld: Child benefit increase Based on reports by Familienportal des Bundes, there will be a slight uptick in their monthly Kindergeld (Child benefit) payments. The rate is set to move from €255 to €259 per child. While the €4 increase is modest, the Kinderfreibetrag (tax-free child allowance) is also rising significantly to €9,756 per child for 2026.

Tax-free allowance adjustments The Federal Ministry of Finance has announced that the Grundfreibetrag (Basic tax-free allowance) is being increased to help citizens cope with “cold progression”, a phenomenon where inflation pushes earners into higher tax brackets. For unmarried people, the first €12,348 of their income will be entirely tax-free. Couples, will see the amount double to €24,696 for those filing jointly.

The Deutschlandticket price jump After years of subsidised travel, the popular nationwide transport pass is seeing its second price hike.

According to the Deutsche Bahn – Deutschlandticke, the standard Deutschlandticket will increase from €58 to €63 per month.

Students can also expect a proportionate rise, with their discounted tickets likely moving to roughly €43 per month.

Restaurant VAT reduction: Dining becomes cheaper In a massive win for the hospitality sector, the VAT on food served in restaurants will be permanently reduced from 19 percent to 7 percent starting from January 1, 2026, based on updates from the Federal Ministry of Finance (BMF).

This reduction applies only to food. Beverages (excluding certain milk-based drinks) will remain subject to the standard 19 percent VAT rate.

These changes represent a mix of relief and rising costs. As the government attempts to future-proof the economy, keeping these figures in mind will help foreign skilled workers and international students budget effectively for the year ahead.

For employees, the Commuter Allowance (Pendlerpauschale) is also increasing to 38 cents per kilometre from the very first kilometre of your commute. When you file your tax return (Steuererklärung) in 2027 for the 2026 year, this will be a primary way to reclaim some of the higher social security costs mentioned above.

Ngozi Ekugo is a Snr.Correspondent at Business day. She has an MSc in Management from the University of Hertfordshire, and is an associate member of CIPM. Her career spans multiple industries, including a brief stint at Goldman Sachs in London,

Join BusinessDay whatsapp Channel, to stay up to date