Tax relief, energy savings, and increased insurance: Your financial guide for 2026
In 2026, families in Germany will experience both exemptions and new burdens. An increase in travel allowances, rising child benefits, and reduced energy costs will enhance the financial situation for many, although rising social security contributions and health insurance prices will diminish some of these gains.
Commuters will benefit from an increase in the distance allowance: starting from January 1, 2026, 38 cents will be paid for each kilometer from the first kilometer, instead of starting from the twenty-first kilometer. This change could increase the annual exemption by about 176 euros for a ten-kilometer trip, contributing to a total exemption of 1.1 billion euros. Low-income individuals can also benefit from the mobility bonus.
Restaurants and catering services will benefit from the reduction of the sales tax from 19% to 7%, while beverages will remain at the old price. Although the goal is to lower prices, some critics, including Yasmin Fahimi from DGB, believe that the economic impact may be limited. The state will bear an annual cost of 3.6 billion euros for this change.
Other benefits include an increase in the basic tax-free allowance to €12,348 for individuals and €24,696 for couples. The legal minimum wage will also rise to €13.90 per hour, while child benefits will increase by four euros to €259 per month for each child, with parental allowance reaching €3,414.
On the expenditure side, health insurance contributions will rise from 2.5% to 2.9%, partially reducing exemptions. Agricultural diesel subsidies, reduced energy costs, and new 'active retirement' rules—which allow working retirees to earn up to €2,000 per month tax-free—will continue, providing families with opportunities and challenges in their budgets for 2026.