Pension, minimum wage, child benefit: What will remain in your wallet in 2025

Health insurance contributions, train travel, refueling: things will become more expensive for people in Germany in many areas of life in 2025. In some cases, however, there is also relief. Among other things, pensions, minimum wages, child and care benefits are increasing. An overview.

Purchasing power and the economy: moderate prospects

There is no improvement in the economic situation in sight after the turn of the year. The Council of Experts for the Assessment of Overall Economic Development recently revised its economic forecast downwards to just 0.5 percent. An inflation rate of 2.1 percent is expected.

Although prices are no longer expected to rise as sharply, experts are not very optimistic about consumers’ purchasing power. Incomes are unlikely to increase as significantly in the new year as they did recently.

The Advisory Council is not alone in this assessment. “Private purchasing power is likely to increase at a slower pace in 2025 than in 2024 due to declining wage growth,” says Philipp Scheuermeyer, economic expert at KfW Research.

Higher minimum wage, more housing benefit

However, there is some positive news for the coming year. The statutory minimum wage will rise from 12.41 to 12.82 euros per hour on January 1st. In some industries, people can also look forward to a plus. From July 1st, the minimum wage for nursing staff will rise to 20.50 euros, for qualified nursing assistants to 17.35 euros and for nursing assistants to 16.10 euros.

In the future, mini-jobbers will no longer only be allowed to earn 538, but 556 euros per month. The annual earnings limit is 6,672 euros. There is also a plus for trainees. The minimum salary in the first year of training increases by 4.7 percent to 649 euros per month. The amount of citizen’s benefit and social assistance will remain unchanged in 2025.

Pensions are due to increase on July 1st. The official forecast for the pension increase is around 3.5 percent more. But that is not yet completely certain, because it will only be in the spring that the Federal Cabinet will determine how pensions will actually increase, depending on the current economic situation and wage developments. The supplement to the disability pension will then also increase in proportion.

It is already certain that citizens with low incomes receive higher rent subsidies from the state. The monthly housing benefit increases by an average of 30 euros or 15 percent at the turn of the year.

Changes to parental and child benefit

In the future there will be less money for some mothers and fathers who stay at home after the birth of a child. Parental allowance should only go to couples who have a taxable annual income of a maximum of 175,000 euros (previously: 200,000 euros). This new limit applies if the child is born on or after April 1st.

From the beginning of the year, child benefit will increase to 255 euros – that’s five euros more per month per child. The tax allowance for children will be increased by 60 euros to 6,672 euros. The immediate child allowance for low-income families also increases by five euros to 25 euros per month.

The basic tax allowance will be increased

The property tax reform will take effect from January 2025. Some homeowners then pay more, others less. The amount depends on the property, the building on it and the municipal assessment rate. There are sometimes big differences between German cities.

In the case of income tax, at least the threat of an increase due to high inflation is prevented. Shortly before the end of the year, the Bundestag and Bundesrat decided to compensate for the cold progression.

Specifically, the basic allowance will be increased by 312 euros to 12,096 euros, i.e. the part of the income that is not taxed. The other key parameters of the tax rate are shifted by 2.6 percent, so that higher tax rates only take effect with higher incomes. The exemption limit for the solidarity surcharge will also be adjusted. Only the limit for the rich tax, which is still above the top tax rate, remains the same.

Higher contributions for insured persons

Despite the tax relief, most German citizens will have less money in their pockets in 2025, according to calculations by the German Economic Institute. This is mainly due to increasing social contributions.

Health insurance is likely to become noticeably more expensive for many people with statutory health insurance. The average additional contribution, which serves as a benchmark for the health insurance funds, will be 2.5 percent next year, 0.8 percentage points more than before.

The health insurance companies themselves determine the amount of the additional contribution for their insured persons. The Techniker Krankenkasse (TK), the largest in Germany with over eleven million insured people, has announced that it will increase the contribution rate to 2.45 percent. For others such as BIG direct healthy (3.39) and Knappschaft (4.4), the increase is significantly greater. For those insured there, the additional burden can be several hundred euros per year. If a fund increases the additional contribution rate, members have a special right of termination.

Nursing care insurance contributions will rise by 0.2 percentage points to 3.6 percent from January. The care allowance – i.e. the benefit for those in need from care level 2 and above who are cared for at home – will be increased by 4.5 percent.

In the future, contributions to statutory pension insurance will be due up to a monthly income of 8,050 euros. Anyone who earns more only pays pension contributions up to this limit. The contribution assessment limit for statutory health and nursing care insurance increases to 5,512.50 euros per month.

Many privately insured people also have to expect premium increases. According to an estimate by the Association of Private Health Insurance, costs for around two thirds of policyholders will rise by an average of 18 percent.

Higher costs for electricity and heating possible

It is also becoming more expensive in other areas of life. From January 1st, the CO2 price will increase from 45 to 55 euros per ton, and network fees will also increase. This has consequences for natural gas customers. According to the consumer advice center, a household with an annual consumption of 20,000 kilowatt hours has to be prepared for an average of 130 euros in additional costs per year.

However, numerous suppliers still want to reduce prices from January because they can procure gas significantly cheaper after the energy crisis. Electricity levies will also rise in 2025. Here, too, it depends on whether the providers pass them on. Heating oil is also becoming more expensive due to the increased CO2 price: a tank filling of 2,000 liters costs 64 euros more than in 2024.

Gasoline and train travel are also becoming more expensive

Drivers also have to dig deeper into their pockets. According to the ADAC, because of the new CO2 price, gasoline will cost almost 3 cents more per liter in the future, while diesel will cost a good 3 cents more. Recently, more had to be paid out for motor vehicle insurance. According to Verivox, new contracts cost almost a quarter more than a year ago. The reason is the sharp increase in spare parts prices and workshop costs.

Train travel will soon also cost more. According to Deutsche Bahn, so-called flex prices are on average 5.9 percent more expensive. In addition, the cancellation of flex prices is subject to a fee starting seven days before the first day of validity. The Germany ticket will no longer cost 49 but 58 euros next year.

More postage, higher cigarette tax

The postage for a standard letter will increase by 10 to 95 cents, and sending other types of letters and parcels will also cost more in the future.

This also applies to smoking. According to the industry association BVTE, the tax burden on a standard 20-pack of cigarettes increases by an average of 15 cents at the turn of the year. Tobacco companies typically raise their prices throughout the year. E-cigarettes are also becoming more expensive.