Germany’s planned tax and social security reforms could change workers’ take-home pay in 2027, with the effect depending on gross income, family circumstances and the number of children. An analysis by Frank Hechtner, a finance researcher at the University of Erlangen-Nuremberg, was used to create a Handelsblatt calculator estimating the changes.
The analysis suggests the government’s promised relief may not reach many people. Although tax changes reduce the burden for some, higher social security contributions can outweigh those savings, especially for higher earners. Some contribution assessment ceilings are set to rise sharply, bringing more income within the scope of social security contributions.
Childless single people see only a small benefit in the scenarios examined: those earning between €1,500 and €5,750 gross per month gain between €8 and €34 a year. Families fare better. A couple with two children, each earning €4,000 a month, would have €416 more annually. If one partner earns €6,000 and the other €4,000, the increase is €272.
Unmarried parents may also benefit when their monthly gross income is up to €6,000. The analysis covers families with no more than two children; households with additional children could have higher net income, mainly because of increased child benefit.
At the other end of the scale, high earners could pay substantially more. Hechtner estimates that someone earning €8,850 a month would pay €1,491 more in social security contributions in 2027 than before. Even after tax relief, that would mean less take-home pay.
Hechtner cautions that the calculations may not capture every situation, particularly for people on lower incomes, who may qualify for other forms of social support. Individual results could therefore differ depending on benefits received.
Sources: Handelsblatt.