Why These Numbers Matter
German social security and tax thresholds are adjusted every year in line with wage growth. They are dry numbers, but they decide four practical things:
- How much of your gross salary is charged with social contributions
- Whether you are allowed to choose private health insurance at all
- How much investment income you keep untaxed
- Where your income tax actually starts
Most expats never revisit them after their first year. That is where money quietly leaks.
The 2026 Numbers at a Glance
| Threshold | 2026 value | What it controls |
|---|---|---|
| Contribution ceiling, pension & unemployment | €101,400/year (€8,450/month) | Income above this is free of pension and unemployment contributions |
| Contribution ceiling, health & long-term care | €69,750/year (€5,812.50/month) | Caps the assessable base for GKV and Pflege |
| Private health insurance threshold (JAEG) | €73,800/year (€6,150/month) | You may only switch to PKV above this |
| Basic tax-free allowance (Grundfreibetrag) | €12,348 | Income below this is untaxed |
| Saver's allowance (Sparer-Pauschbetrag) | €1,000 single / €2,000 married | Investment income free of Abgeltungssteuer |
| Pension contribution rate | 18.6% (split with employer) | Deducted up to the pension ceiling |
| Average GKV supplementary rate | around 2.9% | Added on top of the 14.6% base rate |
Values apply nationwide unless stated. Model your own numbers in the gross-net calculator.
Contribution Ceilings: The High Earner's Detail
Once your gross income crosses a ceiling, contributions on the excess stop.
Two consequences worth understanding:
- Your effective social contribution rate falls as income rises. Someone on €150,000 pays social contributions on only part of that income, which is why a raise above the ceiling feels disproportionately good in net terms.
- Income above the pension ceiling earns no pension points. You keep more net today, but the statutory pension stops growing for that slice. High earners therefore have a *larger* relative pension gap, not a smaller one. See how that plays out in the 2026 pension reform article.
The ceilings are also the reason the retirement gap calculator caps pensionable income, modelling a €200,000 salary as if it all counted towards the state pension would be badly wrong.
The PKV Threshold (JAEG): Only Relevant Once a Year
At €73,800 gross per year in 2026, the JAEG decides whether an employee may leave the public system. Two points that catch expats out:
- The test is on your regular annual gross, including guaranteed recurring components. A one-off bonus does not reliably get you over the line.
- You must also be expected to exceed the threshold in the following year. Crossing it briefly is not enough.
Because the JAEG rises every year, some people who qualified once drop back below it after a job change. The decision is also close to irreversible from age 55. Read the full comparison in our PKV vs. GKV guide, or run the insurance check.
Saver's Allowance: The Easiest Money Most Expats Leave Behind
The Sparer-Pauschbetrag of €1,000 (€2,000 for jointly assessed couples) exempts investment income from the roughly 26.4% Abgeltungssteuer including Soli.
It is not applied automatically. You have to file a Freistellungsauftrag with each German broker or bank, splitting the allowance across them. With a foreign broker, you claim it via Anlage KAP in your tax return instead.
At current interest and dividend levels, €1,000 of exempt income is roughly what a €30,000–40,000 portfolio produces in distributions and Vorabpauschale. Many expats with a mid-size depot are paying tax they do not owe. Full detail in our ETF taxation and Vorabpauschale guide.
Grundfreibetrag and the Rest of the Tax Side
The Grundfreibetrag is €12,348 for 2026. Income below it is untaxed; above it, the progressive rates apply, running up to 42% and then 45% in the top bracket.
For expats, two related items are usually worth more than the headline rate:
- Werbungskosten, the flat deduction is automatic, but relocation costs, a home office and commuting frequently exceed it in the arrival year.
- Sonderausgaben, basic health and long-term care premiums, plus contributions to Rürup and pension products, reduce taxable income.
See the practical list in our 7 tax tips for expats.
Your 20-Minute Annual Check
- Compare a January payslip with the December one and identify every changed line.
- Confirm your Freistellungsauftrag across all German brokers still adds up to €1,000 / €2,000.
- If your salary now exceeds the JAEG, decide deliberately whether PKV is right, do not drift into a default.
- Recheck your tax class after marriage, a child, or a partner's income change.
- Re-run your retirement gap with the new ceilings, the gap moves every year.
Start a no-obligation conversation with us if you want someone to go through your payslip and depot with you once a year.
> Disclaimer: Educational information, not tax advice. Thresholds and rates are set annually by law and can change; some values differ between eastern and western Germany or by health insurer. Verify current figures and your personal situation with a qualified tax advisor (Steuerberater).