A lot will change in personal finances in 2021. In a study, the IW Cologne speaks of the “greatest relief effect in years.” In addition to changes on the expenditure side – such as the elimination of the solidarity contribution – there are also innovations on the income side. For example, child benefit is increasing.
But, as the financial services provider Datev has analyzed, married high-earners without children benefit the most. With a gross monthly salary of 9,000 euros, childless people therefore register an increase of 1,346 euros per year. A couple with the same salary and two children will be relieved of 1,040 euros.
The changes also bring advantages for those in the middle segment. For example, a single who earns around 3,150 euros gross per month is relieved of a total of 400 euros per year.
The biggest losers, however, are low-income families. If they earn less than 2,000 euros gross, they even get nothing, according to Datev. The reason for this: The salary was already below the basic tax allowance in 2020 and only had deductions through social security contributions. Therefore, they will not benefit from the changes in 2021.
Child benefit increases
Parents will in future receive 15 euros more per month for children who are entitled to child benefit – that is 219 euros for children one and two, 225 euros for child three and 250 euros for each additional child.
The minimum wage rises
The minimum wage will also rise, which will be 9.50 euros per hour instead of 9.35 euros from January 2021. A further increase to EUR 9.60 per hour is planned for July 2021. The government is also planning to gradually increase the minimum wage to EUR 10.45 per hour by July 1, 2022.
The minimum training allowance increases
There is also a higher minimum training allowance for trainees. According to a government decision from October 2019, the minimum rate will rise to 550 euros in January 2021. By 2023, it should increase gradually to 620 euros per month.
The basic pension is coming
For pensioners, the basic pension comes from January. Eligible is anyone who has worked for at least 33 years with a below-average salary. This currently affects around 1.3 million people, many of them from East Germany. The basic pension amounts to up to 418 euros per month and is not a replacement, but an additional payment to the existing pension. The pension insurance automatically checks whether you are entitled to the benefit; an application is not necessary.
The pensions are rising – but probably only in the east
However, pensioners in the West should not expect higher salaries. According to the forecasts of the German pension insurance, the pension will not increase for them in 2021. Only in the east is a small plus expected in the wake of the pension adjustment between east and west. The reasons for the stagnation are the falling average wages and a lower number of contributors due to the Corona crisis. However, a final decision on the pension adjustment will not be made until spring.
Less tax on the one hand …
In the case of income tax, the solidarity surcharge for the lower 90 percent is completely eliminated. A further 6.5 percent only have to pay it in part; it is still due for very high incomes.
To compensate for the cold progression, the basic tax-free amount will be increased from 9,408 to 9,744 euros. In addition, the tax rate is – generously – adjusted to inflation. The government is expecting an inflation rate of 1.5 percent – but due to the Corona crisis it is currently only 0.5 percent. For the future, however, experts are again assuming higher rates. The child allowances will also be increased significantly: from 7,812 to 8,388 euros.
Those who work from home during the Corona crisis also receive relief – in the form of a tax bonus. You can claim five euros per home office day, but a maximum of 600 euros per year. The lump sum is part of the advertising expenses. Therefore, only those taxpayers benefit from it, who come above the already applicable advertising fee of 1,000 euros.
More taxes and duties on the other hand
From January 1st, the normal VAT rate of 19 percent and the reduced VAT rate of 7 percent will apply again in Germany. Strictly speaking, however, these adjustments are not an additional burden, but rather a return to normalcy.
On the other hand, there are higher charges for health insurance contributions. Almost all those with statutory health insurance are affected because the health insurance companies have to make up a billion-dollar deficit.
It is noticeably more expensive for consumers at the gas station. From 2021 onwards, companies such as refineries will have to pay 25 euros per ton of CO2 that is generated when diesel and petrol, heating oil and natural gas are burned. The price is passed on to customers: According to the federal government, the price per liter of gasoline will rise by 7 cents, for diesel and heating oil by 7.9 cents, and natural gas will increase by 0.6 cents per kilowatt hour. For this, citizens should be relieved elsewhere – for example, the green electricity surcharge that citizens pay with the electricity price is reduced from tax revenues.