EXPLAINED: Which German benefits are increasing in 2023 - and how do I claim them?
From child benefits to money to cover heating costs, Germany is investing a lot more in residents in 2023. Here's how to claim all the money - and how much you can expect to save.
Amid sky-high inflation, 2022 saw prices increase for just about everything from groceries to heating. To help German residents cope with these costs, the government is distributing aid in the form of rebates, tax deductions and in some cases monthly payments. Here is what you can expect at the start of the new year.
Electricity and gas price brake
When: From Jan. 1st, 2023 to April 30th, 2024.
How much: This depends heavily on individual gas and electricity consumption and the price that consumers pay for energy. According to price comparison portal Verivox, a single household currently paying 20 cents per kilowatt hour for gas will save €320 per year.
A family of four in a townhouse can expect a discount of €1,280. Taking the market price of 25 cents per kilowatt hour into account, the relief rises to €520 for a single household and to €2,080 per year for a family of four.
For electricity savings, Verivox estimates that a single household can save €120 per year and a family of four can save €320, based on a market price of 50 cents per kilowatt hour.
How to benefit: All private customers benefit from the price brakes on gas and electricity, as do small and medium-sized enterprises. The suppliers automatically pass on the rebate to their customers and settle the final price difference with the state. In other words: you don't need to do anything.
The cap set by the government is 12 cents per kilowatt hour for gas, 40 cents for electricity, and 9.5 cents for district heating. In each case, this price will apply to 80 percent of a customer's estimated usage for the year, while the rest will be charged at market price.
In the case of gas, the discount is based on consumption in the previous year; in the case of electricity, the price is based on the annual consumption forecast by the supplier in September 2022. Higher earners (classified as those who also pay the Solidarity Surcharge) must pay tax on the rebate listed on their energy bill.
READ ALSO: How much could households save under Germany's new price gap?
Child benefits (Kindergeld)
Children in primary school in Germany. Photo: picture alliance/dpa | Peter Kneffel
When: Stating January 1st
How much: Child benefits (Kindergeld) will be upped to €250 per month for each of the first three children. Currently parents receive €219 a month for their first and second children, €225 for their third child and €250 from the fourth child onward.
How: Those who already receive Kindergeld can simply watch the increased sum appear in their bank accounts. Otherwise, they need to apply for it at the family benefits office (Familienkasse) of the Federal Employment Agency (Bundesagentur für Arbeit), where it can be claimed retroactively for up to six months.
READ ALSO: Which benefits are you entitled to if you have children in Germany?
New wage and income tax cuts
When: As of January 1st
How much: The basic tax-free amount, on which no taxes have to be paid, is increasing by €561 to €10,908 for the 2023 tax year. The top tax rate of 42 percent will also only apply to incomes of €62,810 or more, not at the previous €58,597.
Germany’s "rich tax rate" of 45 percent, however, continues to apply starting at an income of €277,826..
Additionally, the savers' lump sum (Sparer-Pauschbetrag) - that is, the tax-free amount for investment income - will be increased from the current €801 to €1,000 for single people and from €1,602 to €2,000 for spouses or life partners.
The employee lump sum ("Werbungskostenpauschale") will go up from €1,200 to €1,230. In addition, pension contributions will be fully tax-deductible starting in 2023 - two years earlier than originally planned. Another tax deductible allowance for working from home - whether or not someone has a special space set aside - will increase from €600 to €1,000 per year.
How to benefit: The rate reductions and the majority of the allowances are usually automatically taken into account for employees when they are paid their wages. However, it is always advisable to file a tax return to ensure that all tax benefits are accounted for correctly, as some - such as the Home Office allowance - won’t automatically be deducted by the tax office.
Freelancers who have to file an annual tax return should familiarise themselves with all the deductions they may be entitled to and keep records of any voluntary pension contributions made throughout the year.
Housing allowance (Wohngeld)
A view of Stuttgart. Housing is getting more expensive in Germany, particularly in cities. Photo: picture alliance/dpa | Marijan Murat
When: From January 1st
How much: This depends on housing conditions and earnings; on average, Wohngeld will increase from €180 to €370 a month.
How: With "Wohngeld Plus," not only will the monthly rates increase, but so will the group of recipients. Instead of the previous 600,000, from January around two million people will be entitled to receive Wohngeld, which in future will also include a heating cost component.
The offer is aimed at people who fall outside the scope of other social benefits, but whose income or pension is so low that they have difficulty meeting their housing costs on their own - regardless of whether they rent or live in their own home.
Anyone who wants to receive the subsidy needs to submit an application first. The housing subsidy offices (Wohngeldstellen) in the municipalities and districts are responsible for this. The Federal Ministry of Construction (Bundesbauministerium) offers a housing allowance calculator on its website that can be used to determine whether a person is eligible and what amount can be expected.
€49 'Deutschlandticket'
When: The date is still up in the air, with politicians deliberating between April or May 2023.
How much: As the name implies, both local and regional travel anywhere in Germany will have a monthly cost of €49.
How to benefit: Following the success of the €9 ticket in summer, a potential successor was discussed for a long time - and federal and state governments finally settled on a €49 ticket at a meeting in autumn. Once the ticket goes on sale next year, you'll need to set up a digital 'Abo' (subscription) which you can cancel on a rolling monthly basis. Meanwhile, anyone who already has an Abo will be automatically transferred to the €49 one - so you won't have to do anything. Then you can get hold of your digital ticket and simply enjoy the ride.
Bürgergeld
When: From January 1st
How much: The standard rate for single people will increase from €449 to €502 per month compared to the basic income support.
How to benefit: The introduction of the citizen's income is the biggest social reform of the last 20 years. The goal is to improve the qualifications of the long-term unemployed and get them into permanent jobs.
It will be possible to apply online in every German state. In the short term, those affected will benefit above all from higher standard rates. In future, single people will receive €502 a month, with an extra allowance for each of the following people living in their household: partners €451, children aged 14 to 17 €420, six to 13-year-olds €348 and up to five-year-olds €318.
Recipients will also be allowed to earn more than before without having their allowance reduced, and there will be financial incentives for undergoing training.
READ ALSO: Germany reaches agreement on Bürgergeld - with a couple catches
Energy flat rate for students
When: That depends on how quickly the platform needed to apply is put in place. According to the German government, the payment should be made in the coming months.
How much: A one-time tax-free payment of €200
How to benefit: Everyone who was enrolled at a university in Germany or registered at a vocational school on December 1st, 2022, is entitled to a one-time energy cost subsidy of €200. According to Education Minister Bettina Stark-Watzinger (FDP), nearly three million university students plus 450,000 students in technical college classes and vocational school classes will benefit.
Since neither the federal government nor the states have the account data of those eligible, an application must be submitted for the subsidy. The federal and state governments are currently developing a digital application platform for this purpose.
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Amid sky-high inflation, 2022 saw prices increase for just about everything from groceries to heating. To help German residents cope with these costs, the government is distributing aid in the form of rebates, tax deductions and in some cases monthly payments. Here is what you can expect at the start of the new year.
Electricity and gas price brake
When: From Jan. 1st, 2023 to April 30th, 2024.
How much: This depends heavily on individual gas and electricity consumption and the price that consumers pay for energy. According to price comparison portal Verivox, a single household currently paying 20 cents per kilowatt hour for gas will save €320 per year.
A family of four in a townhouse can expect a discount of €1,280. Taking the market price of 25 cents per kilowatt hour into account, the relief rises to €520 for a single household and to €2,080 per year for a family of four.
For electricity savings, Verivox estimates that a single household can save €120 per year and a family of four can save €320, based on a market price of 50 cents per kilowatt hour.
How to benefit: All private customers benefit from the price brakes on gas and electricity, as do small and medium-sized enterprises. The suppliers automatically pass on the rebate to their customers and settle the final price difference with the state. In other words: you don't need to do anything.
The cap set by the government is 12 cents per kilowatt hour for gas, 40 cents for electricity, and 9.5 cents for district heating. In each case, this price will apply to 80 percent of a customer's estimated usage for the year, while the rest will be charged at market price.
In the case of gas, the discount is based on consumption in the previous year; in the case of electricity, the price is based on the annual consumption forecast by the supplier in September 2022. Higher earners (classified as those who also pay the Solidarity Surcharge) must pay tax on the rebate listed on their energy bill.
READ ALSO: How much could households save under Germany's new price gap?
Child benefits (Kindergeld)
When: Stating January 1st
How much: Child benefits (Kindergeld) will be upped to €250 per month for each of the first three children. Currently parents receive €219 a month for their first and second children, €225 for their third child and €250 from the fourth child onward.
How: Those who already receive Kindergeld can simply watch the increased sum appear in their bank accounts. Otherwise, they need to apply for it at the family benefits office (Familienkasse) of the Federal Employment Agency (Bundesagentur für Arbeit), where it can be claimed retroactively for up to six months.
READ ALSO: Which benefits are you entitled to if you have children in Germany?
New wage and income tax cuts
When: As of January 1st
How much: The basic tax-free amount, on which no taxes have to be paid, is increasing by €561 to €10,908 for the 2023 tax year. The top tax rate of 42 percent will also only apply to incomes of €62,810 or more, not at the previous €58,597.
Germany’s "rich tax rate" of 45 percent, however, continues to apply starting at an income of €277,826..
Additionally, the savers' lump sum (Sparer-Pauschbetrag) - that is, the tax-free amount for investment income - will be increased from the current €801 to €1,000 for single people and from €1,602 to €2,000 for spouses or life partners.
The employee lump sum ("Werbungskostenpauschale") will go up from €1,200 to €1,230. In addition, pension contributions will be fully tax-deductible starting in 2023 - two years earlier than originally planned. Another tax deductible allowance for working from home - whether or not someone has a special space set aside - will increase from €600 to €1,000 per year.
How to benefit: The rate reductions and the majority of the allowances are usually automatically taken into account for employees when they are paid their wages. However, it is always advisable to file a tax return to ensure that all tax benefits are accounted for correctly, as some - such as the Home Office allowance - won’t automatically be deducted by the tax office.
Freelancers who have to file an annual tax return should familiarise themselves with all the deductions they may be entitled to and keep records of any voluntary pension contributions made throughout the year.
Housing allowance (Wohngeld)
When: From January 1st
How much: This depends on housing conditions and earnings; on average, Wohngeld will increase from €180 to €370 a month.
How: With "Wohngeld Plus," not only will the monthly rates increase, but so will the group of recipients. Instead of the previous 600,000, from January around two million people will be entitled to receive Wohngeld, which in future will also include a heating cost component.
The offer is aimed at people who fall outside the scope of other social benefits, but whose income or pension is so low that they have difficulty meeting their housing costs on their own - regardless of whether they rent or live in their own home.
Anyone who wants to receive the subsidy needs to submit an application first. The housing subsidy offices (Wohngeldstellen) in the municipalities and districts are responsible for this. The Federal Ministry of Construction (Bundesbauministerium) offers a housing allowance calculator on its website that can be used to determine whether a person is eligible and what amount can be expected.
€49 'Deutschlandticket'
When: The date is still up in the air, with politicians deliberating between April or May 2023.
How much: As the name implies, both local and regional travel anywhere in Germany will have a monthly cost of €49.
How to benefit: Following the success of the €9 ticket in summer, a potential successor was discussed for a long time - and federal and state governments finally settled on a €49 ticket at a meeting in autumn. Once the ticket goes on sale next year, you'll need to set up a digital 'Abo' (subscription) which you can cancel on a rolling monthly basis. Meanwhile, anyone who already has an Abo will be automatically transferred to the €49 one - so you won't have to do anything. Then you can get hold of your digital ticket and simply enjoy the ride.
Bürgergeld
When: From January 1st
How much: The standard rate for single people will increase from €449 to €502 per month compared to the basic income support.
How to benefit: The introduction of the citizen's income is the biggest social reform of the last 20 years. The goal is to improve the qualifications of the long-term unemployed and get them into permanent jobs.
It will be possible to apply online in every German state. In the short term, those affected will benefit above all from higher standard rates. In future, single people will receive €502 a month, with an extra allowance for each of the following people living in their household: partners €451, children aged 14 to 17 €420, six to 13-year-olds €348 and up to five-year-olds €318.
Recipients will also be allowed to earn more than before without having their allowance reduced, and there will be financial incentives for undergoing training.
READ ALSO: Germany reaches agreement on Bürgergeld - with a couple catches
Energy flat rate for students
When: That depends on how quickly the platform needed to apply is put in place. According to the German government, the payment should be made in the coming months.
How much: A one-time tax-free payment of €200
How to benefit: Everyone who was enrolled at a university in Germany or registered at a vocational school on December 1st, 2022, is entitled to a one-time energy cost subsidy of €200. According to Education Minister Bettina Stark-Watzinger (FDP), nearly three million university students plus 450,000 students in technical college classes and vocational school classes will benefit.
Since neither the federal government nor the states have the account data of those eligible, an application must be submitted for the subsidy. The federal and state governments are currently developing a digital application platform for this purpose.
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