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Germany Approves Pension Reform, €10B Tax Relief, Top Rate Hike

7/2/2026

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Summary

Story summary

German Chancellor Friedrich Merz’s coalition announced a pension and tax reform package that parliament is expected to pass by year-end.
The plan provides €10 billion in tax relief for lower-income earners, funded by raising the top income-tax rate to 47 % for salaries above €280,000.
Unions say the pension reform raises the retirement age for physically demanding jobs and will overload the health system with stricter sick-note rules.

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Story summary

German Chancellor Friedrich Merz’s coalition announced a pension and tax reform package that parliament is expected to pass by year-end.
The plan provides €10 billion in tax relief for lower-income earners, funded by raising the top income-tax rate to 47 % for salaries above €280,000.
Unions say the pension reform raises the retirement age for physically demanding jobs and will overload the health system with stricter sick-note rules.