Important Changes in Germany Starting from July 2025

As a new month begins, so do new laws and regulations in Germany. From higher pensions and wages to updated tax deadlines and simplified care benefits, July 2025 brings a range of changes that affect many people’s daily lives. Whether you’re retired, working in healthcare, caring for a loved one or filing your taxes — it’s important to stay informed and understand how these changes may impact you.

Pensions Will Increase

Every year in July, pensions in Germany are adjusted to keep up with general living costs. In 2025, pensions will go up by 3.74%. For pensioners, this means a noticeable improvement in their financial situation. If your pension is €1,000 per month, the 3.74% increase means you will receive €37.40 more each month.

Due to the pension increase, many pensioners will, for the first time, exceed the basic tax-free allowance, which in 2025 is set at €12,096 for single individuals. As a result, around 73,000 pensioners will now be required to file a tax return and may have to pay taxes.

People who are too ill or disabled to work and receive a disability pension will also get a 3.74% increase. Some of these pensions also include a bonus (4.5% or 7.5%) depending on when the pension started. This bonus will also increase from July.

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Exemption limit for widow’s pension increases

Starting from 1 July 2025, the exemption limit for widow(er)’s pensions will increase from €1,038 to €1,077 per month. This change means that widow(er)s can now earn a bit more income without affecting the amount they receive from the widow’s pension.

Additionally, there is an important extra benefit for those who have underage children still in school or undergoing vocational training. For each such child, the exemption limit will rise by €220.19. This helps ensure that families with dependents, particularly those who are still in school, are supported and can maintain their financial stability without penalty.

However, it’s essential to remember that any income exceeding this new threshold (i.e., the pension plus the exemption amount) will be deducted from the widow(er)’s pension. This means that the pension will gradually decrease in proportion to the income earned above the new exemption limit.

For example:

• If a widow has a pension of €1,077 (the new exemption limit) and earns an income of €500 from another source, her total income will be €1,577.
• If she has one child still in school, her exemption limit will increase by €220.19, making the new exemption limit €1,297.19.
• However, if her income exceeds the new exemption limit, the amount above €1,297.19 will be deducted from her widow’s pension.

This system helps maintain fairness by ensuring that financial support is provided primarily for those who need it most while also encouraging self-sufficiency without discouraging additional income. The increase in the exemption limit also acknowledges the rising costs of living and aims to give individuals some breathing space as they navigate their financial obligations.

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Easier Access to Caregiver Support (Verhinderungspflege)

Starting in July 2025, important changes will take effect in Germany’s long-term care insurance system: the benefits for respite care (Verhinderungspflege) and short-term care (Kurzzeitpflege) will be combined into a single annual budget of €3,539. People in need of care from Care Level 2 (Pflegegrad 2) and above will be able to use this budget flexibly and easily, without needing to file separate applications for each type of care.

In addition, the previous requirement of six months of prior home care before being eligible for respite care will be eliminated.

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Higher Minimum Wage in Elderly Care

To make the profession more attractive and address the shortage of skilled workers, minimum wages in elderly care will rise starting in July 2025:

• Qualified nurses: €20.50 per hour
• Certified nursing assistants: €17.35 per hour
• General nursing assistants: €16.10 per hour

These increases aim to improve working conditions and help retain staff in the long-term care sector.

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Tax Return Deadlines

Taxpayers should note that the deadline to submit the 2024 tax return is 31 July 2025. However, if you use a tax advisor or a wage tax assistance association, the deadline is extended until 30 April 2026.

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New Garnishment Exemption Limits 

From 1 July 2025, higher garnishment exemption limits will apply in Germany. Garnishment exemption limits protect the minimum living standard of debtors. They determine which part of their income is exempt from garnishment in order to secure basic living expenses. The exemption limits is based on the net income and the number of dependents for whom the debtor is responsible. These new values will remain in effect until 30 June 2026.

• Non-garnishable base amount: Increases from €1,491.75 to €1,555.00 per month.
• Exemption for the first dependant (such as a child or spouse): Increases from €561.43 to €585.23.
• Exemption for the second to fifth dependant: Increases from €312.78 to €326.04 per person.
• Maximum non-garnishable amount (for 5 dependants): €3,444.39 (previously €3,304.43).
• Full garnishment threshold: Garnishment is allowed for monthly net earnings above €4,766.99 (previously €4,573.10).

These changes mean that debtors will be allowed to keep more of their income for basic living expenses and can continue to meet their family obligations before garnishment begins.

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Pay Raise for Members of the German Bundestag

Starting in July 2025, members of the German Bundestag will also receive more money. Their monthly compensation (called Diäten) will increase by 5.4 percent, rising to about €11,834 per month, which is an increase of €606.

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New Energy Labels for Clothes Dryers

Appliances sold in Germany must show how energy-efficient they are. From July 2025, clothes dryers will use the new A–G label (no more confusing A+++). This makes it easier to compare energy use and noise levels.
Products labeled “A” are the most energy-efficient.

Femi Awoniyi

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