Pension: increase and tax – These changes will be in 2023

In 2023, there are some changes to the pension. Tax, assessment limit and Co., all information at a glance.

Pensioners who are in the law Pension savings deposits in Germany must expect some changes in the coming year. In addition to adjustments to the taxation of pensions, revisions are also made to the contribution employment ceiling and the average salary.

From 2023, pension payments can now be fully tax-deductible. The goal is one double taxation prevent retirement. The pension is therefore only taxed when it is paid out in old age. Any expenses for the pension scheme are then calculated as a special expense.

Pension: Double taxation should be avoided

According to the Ministry of Finance, this change should lead to relief for taxpayers of around 3.2 billion euros. The reason for the adjustment is a decision made by Federal Tax Court from May 2021. Without this, pensioners would face double taxation. Then, on the one hand, tax would be paid on the income from which the pension is withdrawn, and on the other hand for the pension payment itself. This prevents the new change.

This applies to contribution payments to the statutory pension insurance, the agricultural old-age fund, the professional pension institutions and the basic pension contracts. With the start of this regulation on January 1, 2023, it will be implemented two years earlier than planned.

The purpose of pensions is to guarantee social security

In addition, according to the federal government, the contribution assessment limit for general pension insurance will increase in the new year. This determines the amount to which posts can be deducted for the insurance. In the new federal states, this will be adjusted from 6750 euros (2022) to 7100 euros (2023). In the old federal states, the limit will rise from 7,050 euros (2022) to 7,300 euros (2023).

The framework is adjusted each year to reflect income trends social Security to guarantee. The change ensures that insured persons continue to receive a pension that is commensurate with rising wages.

The pension increase is still unclear

According to initial calculations by the federal government, retirees must be prepared for pension increase lagging again after the general price increase in the coming year. According to the current status, pensions can increase by a good 3.5 percent in the west and by around 4.2 percent in the east from July 1, 2023. This is evident from the draft pension insurance report 2022, which was presented to Reuters on Saturday. The specific pension increase will not be known until next spring, when data on the salary development is available.

The annual pension adjustment will thus remain below the inflation rate of 7.0 percent that the federal government expects for 2023. Already in 2022, pensioners had to note a loss of purchasing power despite a significant increase. From 1 July, pensions had been increased by 5.35 percent in the West and by 6.12 percent in the East. However, the government expects prices to rise by 8.0 percent on average this year.

The calculations are based on October figures from the pension insurance estimators. The salary development is decisive for the size of the pension adjustment. The expected strong wage increases are primarily due to high inflation. In the draft report for 2022, the federal Department of Labor assumes a gross wage increase per employee of 4.5 percent. In the following two years, increases of 5.0 and 4.7 percent are expected. In addition, the number of employees will initially increase. (rs)

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