Bundes budget: pension, citizens’ money, traffic – what is in the household 2026

It is the second draft budget within a short time. Just a few weeks ago, the Federal Cabinet decided the plans for this year – on Wednesday it was about the household 2026. The big challenge is in the years after – because in financial planning until 2029 there is a huge gap. Federal Finance Minister Lars Klingbeil (SPD) swore the black and red coalition to larger foreseeable savings constraints. After the decision in the cabinet, the Bundestag is on the move.

2026 expenditure of 520.5 billion euros is planned, which is 3.5 percent more than this year. The budget 2025 is to be decided in September. The investments are expected to be 126.7 billion euros in 2026 – for example, the renovation of bridges and railway lines, stronger digitization and more money for education is planned.

In 2026, the federal government plans to start new loans of 89.9 billion euros in the core budget. In addition, there are new debts of a total of 84.4 billion euros from the two special funds – on the one hand for infrastructure and climate protection, and on the other hand for the Bundeswehr. In total, new debts of more than 850 billion euros are planned between 2025 and 2029. In the cabinet template for the budget, investments for quick growth, more employment and modernization of Germany are mentioned as central priorities – as well as in strengthening external and internal security. Structural reforms are also mentioned, even so that the special funds also have a quick effect to improve the infrastructure.

As usual, the greatest budget is that of the Ministry of Labor and Social Affairs at around 197.4 billion euros – that is almost four percent more than in the budget in 2025. By far the largest single item in the entire household is the increasing federal grant to the pension insurance with around 127.8 billion euros. According to the cabinet template, federal benefits will increase to a total of around 154.1 billion euros by 2029.

In 2026, around 41 billion euros are estimated for the citizens’ allowance and for the participation of the federal government and heating costs. That is around 1.5 billion euros less than for 2025. This is justified in the template with the fact that the federal government expects a revival of the labor market, which should lead to a falling number of beneficiaries and thus to lower expenses.

The Bundeswehr should get significantly more money. Defense spending of around 128 billion euros is planned for 2026. In order to strengthen the Bundeswehr, the debt brake was relaxed for defense spending. Defense expenditure should continue to increase massively in the coming years.

What there should be money for

In the household draft 2026 and financial planning by 2029, projects announced in the coalition agreement were “shown”, the template said. This includes an increase in funding for social housing, more money for daycare centers and the continuation of the Germany ticket in local and regional traffic – as well as the reduction of VAT on food in the catering trade and an increase in the commuter flat rate. At the same time, however, it is said that all projects are under the premise of the priority promotion of growth and justice. “In addition, measures can only be implemented if the necessary financing scope can be realized.”

For which there should be less money and what no money is there for

No money is intended for the time being to reduce ticket tax in air traffic. “There are currently no scope in the federal budget,” it said from government circles. Air traffic tax was significantly increased in May 2024. This potentially expensive passenger flights from German airports.

There is also no talk of a electricity tax reduction for all companies and for private households. That would cost an additional 5.4 billion euros, but corresponding scope would have to be created.

Increases are planned in the 2026 budget, for example in the development expenditure. In addition, there should be job cuts in the federal administration – only not with security authorities. In 2026, the savings rate is expected to be 2 percent.

In the financial planning from 2027 to 2029, a large budget gap of around 172 billion euros has a total of around 172 billion euros. The gap has increased again compared to cornerstones in mid -June. One reason is billions in compensation for municipalities and countries due to tax relief for companies. “The household 2027 will be an enormous challenge for the government,” said Klingbeil.

In order to strengthen the state income, according to the cabinet template “consistently” against tax fraud and financial crime should be carried out.

Savings in social systems?

Union and SPD have agreed to use reform commissions in the face of increasing billions of billions for social systems such as pension, health and care. According to the cabinet template, these are intended to submit results that also contribute to relieving the federal budget. But that could cause great conflicts.

Green criticize household

The green housekeeper Sebastian Schäfer said the coalition had no plan for the future. Despite historical debt, the household holes have grown by many billions in a few weeks. “This is how responsibility is misleaded, digitization is abducted, climate protection ignored and international solidarity refuses.”