Germany cuts real value of care allowance and housing benefits

The federal government confirmed that the monthly care allowance (Pflegegeld) has lost about 15 % of its purchasing power since 2017, despite nominal increases scheduled for 2025 and 2026. The entitlement for care grade 5 fell from €901 to a real‑value equivalent of €773.

A draft reform of the long‑standing Entlastungsbetrag will replace it with a higher "Social Space Budget" for care grades 2‑5, but the new budget will not be available to people in care grade 1, effectively removing the €131 monthly support that many in that group rely on for everyday assistance.

The cabinet also approved a restructuring of the housing‑cost subsidy Wohngeld. The plan aims to save up to €2 billion a year by halving the number of eligible households and cutting payments, with about one‑third of current recipients expected to lose the benefit after the changes take effect in 2027. Recent statistics from Thuringia showed that singles (over 66 % of recipients) and retirees make up the bulk of Wohngeld beneficiaries, underscoring the impact of the upcoming cuts.