Germany 2026: Big Changes Ahead for Salaries, Taxes, and Visas
Your essential guide to Germany 2026: taxes, wages, E-Visas, and how to save money amid rising health costs. 💡
Key Takeaways
- Germany’s economy is expected to outperform, driven by public investments, leading to a stable job market and better wage.
- The Basic Tax-Free Allowance increases, protecting a larger portion of income from taxation, providing widespread financial relief.
- The exemption threshold for the “Soli” tax rises further, effectively making this tax disappear for most earners.
- The Minijob limit increases to €603/month, and the minimum wage rises to €13.90/hour, boosting income for lower-wage workers.
- Maximum Public Health Insurance and Pension contributions will rise significantly due to increases in the income caps.
- The Commuter Allowance increases to 38 cents/km and applies from the first kilometer, offering a real tax saving for all commuters.
- Employers must include salary ranges in job advertisements and are prohibited from asking about a candidate’s previous salary.
- The “Work-and-Stay Agency” and the start of the Chancenkarte will streamline and speed up the immigration process for expats.
- VAT on restaurant food (not drinks) returns to 7%, aiming to provide relief to the gastronomy sector and ease consumer prices.
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More InformationBreaking Down the Major Economic, Financial, and Immigration Shifts
Whether you already live in Germany or are planning your move here, 2026 will change everything: salaries, taxes, benefits, visas—the entire system. Global financial institutions are taking note; Goldman Sachs even predicts that Germany will “outperform” in 2026, marking it as one of the most important years in recent German history.
But what does that actually mean for your everyday life? Will these sweeping changes make living in Germany easier and cheaper, or harder and more expensive? We will break down every important 2026 change across the economy, your finances, and immigration rules so you know exactly what is coming.
Economic Outlook: Outperforming the Competition
When Goldman Sachs speaks of “outperform,” they are referring to the German economy being expected to grow noticeably again after several years of stagnation. This economic upswing is primarily driven by massive public investment, such as the €500 billion Sondervermögen (special fund), combined with rising wages and consumer spending.
For you as an expat, this means a significantly more stable job market, better wage prospects, and overall stronger economic conditions. This is crucial for career planning and long-term financial stability. A growing economy means companies are hiring, and the pressure on wages is generally upward, providing a good foundation for salary negotiations and career advancement opportunities.
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More InformationConstruction and Housing Investment
One of the sectors expected to grow the most during this upswing is construction, though the housing picture remains mixed. Even though 2026 brings a financial turnaround, Germany will still complete far fewer homes than needed, covering only about 58% of the actual housing demand. To fight this persistent shortage, the government plans record investments, new “Bau-Turbo” rules to speed up construction permits, and stronger tax incentives for builders and buyers.
These measures are designed to increase the supply of new housing, especially in and around major urban centers where demand is highest. If you want to benefit from these housing-related programs, such as subsidized lending or new tax depreciation rules, securing expert advice early is key to navigating the complex application processes.
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More InformationThe Rising Minijob Limit and Pay Transparency
Moving into the work category, the Minijob limit will rise again in 2026 because it is directly linked to the statutory minimum wage. Next year, you can earn up to €603 per month, which remains completely free of health, care, and unemployment insurance contributions, as well as being tax-free.
However, one of the biggest changes for your main job comes from the new EU pay-transparency law, effective in 2026. This law will require employers to include salary ranges in job advertisements, and they will no longer be allowed to ask applicants about their previous salary. Employees can also request average pay data for their role and gender, and companies cannot hide salaries behind secrecy clauses in employment contracts anymore. This shift is set to revolutionize job hunting and wage negotiations across Germany.
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More InformationMinimum Wage Hike and Tax Relief
The national minimum wage (Mindestlohn) will rise to €13.90 per hour in 2026 and then further to €14.60 in 2027. That represents a total increase of almost 14% in just two years. Around six million workers will directly benefit from this increase, although most highly skilled expats will earn above this threshold.
Regardless of your income level, the next two changes will affect everyone. The Grundfreibetrag—the basic tax-free allowance—will increase again. For single individuals, it rises to €12,348, and for married couples, it simply doubles. All income up to that level stays completely tax-free, which protects your basic cost of living. This tax benefit is literally for everyone and ensures that a greater portion of every person’s earnings remains untaxed.
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More InformationGoodbye, Solidarity Tax
High earners receive additional relief through changes to the solidarity tax, or the “Soli”. The exemption threshold rises again, meaning single individuals won’t pay the Soli unless their taxable income exceeds roughly €75,000. The rate stays at 5.5% of your income tax, but for most people, this tax simply disappears as their income falls below the expanding exemption threshold.
Furthermore, there are adjustments for families. The Kinderfreibetrag—the child tax allowance—rises to €9,756 per child for both parents together. This allowance reduces your taxable income, meaning you pay less income tax for each child. Whether you benefit more from this allowance or from the monthly Kindergeld (which sees a disappointing €4 raise to €259/month) depends on the automatic Günstigerprüfung (most-favorable check) performed by the tax office when you file your return.
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More InformationCommuter Allowance and Restaurant VAT
A highly anticipated tax benefit for nearly all workers is the increase in the commuter allowance, the Pendlerpauschale, which rises to 38 cents per kilometer. For the first time ever, this allowance applies from the very first kilometer, meaning higher deductible expenses and a real tax benefit, no matter how you get to work: by car, train, bike, or even on foot. In total, commuters are expected to save around €1.1 billion across the country, with every 10km of daily commuting saving you approximately €176 more per year.
On a separate note, restaurants will see their VAT return to 7% on food instead of 19%. This is meant to support the hospitality industry and ease price pressure for consumers. Just remember: this applies only to food; drinks still stay at the full 19% VAT rate.
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More InformationThe Bad News: Rising Social Security Costs
After all the good news regarding taxes and allowances, are you ready for something bad—like really bad? Public health insurance is set to get up to almost 8% more expensive depending on your salary, and public pension contributions will increase by nearly 5%. And many health insurers, including some of the largest, warn that even this increase won’t be enough to cover the rising costs. Think about that: an 8% hike is deemed “not enough.”
These costs are rising due to the maximum income caps for social security contributions increasing, as well as an average hike in the additional health contribution (Zusatzbeitrag). This is where financial planning becomes critical, as these quiet percentage bumps significantly eat into your net salary.
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More InformationElectricity Subsidies and E-Car Tax Breaks
To offset some of the rising utility costs, the government plans a €6.5 billion subsidy to reduce grid fees, which make up almost 30% of your power price. On average, this is expected to lower electricity costs by about 1–2 cents per kilowatt-hour, meaning a typical household could save roughly €70–€80 per year.
Additionally, there’s an interesting change for those driving a company car, particularly an electric one. The price limit for the beneficial 0.25% tax rule on electric vehicles rises from €70,000 to €100,000 next year. This means you are taxed on only a quarter of the list price for private use, provided the car stays below this higher limit. More expensive EVs still get the 0.5% rate, and “normal” cars remain at 1%, making driving an electric company car even more attractive in 2026.
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More InformationDigitalization and Immigration: The Expats' Future
Let’s end with some long-overdue changes in the expat category: Germany’s administration is finally going digital. Next year, the government is investing heavily in modernizing public services, led by a newly organized digital ministry. The goal is simple: end-to-end digital processes, meaning you submit forms online, and authorities process everything digitally, without paper.
This is especially relevant for expats because immigration authorities will upgrade their systems, expand the central immigration register, and speed up communication between offices. This directly leads to the next big change: how Germany wants to attract skilled expats even faster.
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More InformationThe Work-and-Stay Agency and Chancenkarte Expansion
With the new digital “Work-and-Stay Agency,” Germany’s next big step for expats is making work immigration easier and much faster. Its goal is to become a central platform that simplifies the entire process of coming to Germany for work: reducing bureaucracy, unifying procedures, and speeding up approvals. At the same time, the Skilled Immigration Act continues to expand, aiming to attract an additional 130,000 global talents each year, including up to 75,000 qualified professionals.
And finally, the Chancenkarte (Opportunity Card) will play a major role in 2026. It allows qualified professionals from outside the EU to come to Germany and look for a job, even without a contract, provided they score at least six points based on education, language skills, and financial stability. This tool will become far more effective as digital processes improve.