Germany Replaces Bürgergeld with Stricter Basic Income as Coalition Approves 34-Point Reform Package
03.07.2026 - 02:22:15 | boerse-global.de
The German government’s new Grundsicherung—a tighter replacement for Bürgergeld—took effect on July 1, imposing tougher sanctions and a lower Schonvermögen (protected assets) threshold. It is one of 34 measures in a far-reaching reform bundle passed by the CDU/CSU and SPD coalition that touches labor, pensions, and taxes.
While the new basic-income rules reduce financial buffers for recipients, other changes in the same package offer opportunities. Around seven million Minijobbers—low-wage workers earning up to €538 a month—can now reverse their previous exemption from pension insurance. Until June 30, most had opted out. If they revoke that exemption, they pay 3.6 percent of their wages into the state pension system, while employers contribute 15 percent. The one-time choice, effective from July 1, is irrevocable and applies to all their Minijobs simultaneously.
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The move addresses a persistent pension gap. Roughly 80 percent of Minijobbers had opted out, largely women, who already face a 14 percent gender pay gap. Opting back in buys full waiting-time months and access to rehabilitation and disability benefits. For context, state pensions rose 4.24 percent on July 1, pushing the pension point value from €40.79 to €42.52.
The reforms also raise costs for employers. Starting July 2, the flat-rate tax on Minijobs climbs from 2 to 5 percent, partly financing tax cuts elsewhere. Separately, a planned GKV-Spargesetz (statutory health insurance savings law) would hike the employer social security contribution from 13 to 17.5 percent. By end-2026, the coalition aims to implement all 33 recommendations from the Alterssicherungskommission (old-age security commission), including a full review of Minijobs’ special status—potentially requiring contributions to all branches of social insurance for everyone except students.
Arbeitsmarktexperte Ulrich Walwei warns that higher non-wage costs could threaten up to 500,000 jobs covered by social insurance in small firms, as employers shift away from regular hires.
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Labor law sees a notable reversal: the telephone sick note (telefonische Krankschreibung) is abolished entirely. From now on, employees must present a doctor’s certificate of incapacity (Arbeitsunfähigkeitsbescheinigung) on their first day of illness, not after three days as before. Fixed-term contracts become more flexible in the other direction: the maximum duration for contracts without a material reason rises to 48 months, with up to six renewals, until end-2030.
Tax relief is slated for January 1, 2027. The government plans to cut income tax by roughly €10 billion annually, raising the basic allowance, child benefit, and employee lump-sum deductions. To finance this, a stricter wealth tax will apply: incomes above €250,000 face a 45 percent rate, rising to 47 percent above €280,000.
Other July 1 changes: the minimum wage for care workers increased to €16.52 for aides and €21.03 for skilled staff. The attachment-exemption limit (Pfändungsfreigrenze) for single earners rose to €1,587.40 net monthly. And the old Bürgergeld regime gave way to Grundsicherung, with stricter sanctions and lower asset allowances.
