Significant increase in pensions leads more pensioners into tax liability

Pensions will increase significantly again this summer, meaning that more pensioners will be obliged to submit a tax return for the first time.

It is now certain that the statutory pension will increase by 4.39 % in West Germany and 5.86 % in the new federal states as of July 1, 2023. This means that the pension value will be the same in the west and east for the first time. Due to the higher wage increase in the east, the pension adjustment will be achieved one year earlier than legally envisaged. However, at least in eastern Germany, the pension increase is also higher than the percentage increase in the tax-free basic allowance, which has risen by 5.4 % for 2023, especially as pension adjustments are fully taxable and the pension adjustment in 2022 was even higher (5.35 % in the west, 6.12 % in the east). As a result, many pensioners will have to submit a tax return for the first time in 2023.