German retirees face growing tax bills and poverty risk
A recent analysis by the tax‑return service smartsteuer shows that about 41 % of German pensioners received a tax bill after filing, with an average back‑payment of €1,326. The liability stems from the fact that pension income is taxed only when the assessment arrives, and many retirees earn additional income – 48.5 % have side earnings such as part‑time work or rental income – which pushes them over the basic allowance.
New figures from the Federal Ministry of Labour reveal that one in five retirees is now classified as at risk of poverty, especially women. In 2025 roughly 1.3 million seniors received basic security benefits, and the number of pensioners claiming Wohngeld (housing allowance) has risen sharply.
The government‑approved “Mütterrente III” reform will award an extra half pension point for each child, translating into about €20 extra per month per child, with a retroactive lump‑sum payment scheduled for 2027. The expanded Wohngeld‑Plus scheme also means pensioners with a net rent of €1,800 may qualify for supplemental housing aid, depending on household size and income.
Self‑employed seniors, such as taxi drivers, encounter additional hurdles: savings for a new vehicle can be counted as assets and reduce their Grundsicherung benefits, limiting their ability to stay in work while receiving social support.