Working while drawing a German pension: the 2026 rules in figures
Since 2023 anyone on a German old-age pension can earn without limit. Part of the pay earned after the standard retirement age is also tax-free. What that means for expats who keep working.
Worked through by Radif Partners · Editorial policy · How we calculate
Pay alongside your pension: what stays tax-free
Tax-free a year
€24,000
| Taxable pay a year | €6,000 |
| Earnings cap on old-age pensions | none since 2023 |
| Tax on the remaining pay alone (after the €1,230 allowance) | €0 |
The exemption starts the month after the standard age and applies to employees only, not to the self-employed.
If you draw a German old-age pension you can earn as much as you like alongside it: the earnings cap (Hinzuverdienstgrenze) was abolished in 2023, including for early pensions from 63. On top comes the so-called active pension (Aktivrente), which is a tax exemption rather than a pension: pay from employment after reaching the standard retirement age is tax-free up to €24,000 a year (section 3 no. 21 Income Tax Act). It starts the month after you reach that age, covers employees only, not the self-employed, and is cut by one twelfth for each month in which the conditions are not met. On €2,000 a month your whole salary is tax-free; on €2,500, €6,000 a year remains taxable. Before the standard age there is no such exemption. If contributions are paid on your pay, you earn new pension points, added each 1 July of the following year: €30,000 of annual pay adds €24.56 to your monthly pension. Disability and survivors’ pensions are different: income is still offset against them.
Old-age pension plus pay: no ceiling any more
Since 2023 there has been no earnings cap on old-age pensions (German Pension Insurance key values). Since then, anyone drawing an old-age pension, whether at 63 after 35 years, after 45 years, with a severe disability or at the standard age, can earn any amount without the pension shrinking. That changed the logic of early retirement. A reduced pension plus a full salary is legally possible, but the reduction lasts for life even if you keep working full time until 67. What starting early costs is on retiring at 63.
Aktivrente: tax-free pay after the standard age
There is an extra incentive for employees who work past the standard retirement age. Their pay is tax-free up to €24,000 a year (section 3 no. 21 EStG). Four conditions matter:
- The exemption starts only the month after you reach the standard age, never during an early pension.
- It covers pay from employment only; self-employed profits are excluded.
- For each calendar month in which the conditions are not met, the annual amount falls by one twelfth.
- Whether you draw your pension at the same time makes no difference to the exemption.
| Gross pay a month | Pay a year | Tax-free (Aktivrente) | Taxable remainder |
|---|---|---|---|
| €1,000 | €12,000 | €12,000 | €0 |
| €1,500 | €18,000 | €18,000 | €0 |
| €2,000 | €24,000 | €24,000 | €0 |
| €2,500 | €30,000 | €24,000 | €6,000 |
| €3,500 | €42,000 | €24,000 | €18,000 |
The pension itself stays taxable as before, at the taxable share of your start year. Any taxable pay above the exemption is added to the taxable part of the pension and taxed together, which can noticeably raise the rate on the pension. The pension tax calculator shows the effect for your figures.
The first year is pro rata
Example: an employee reaches the standard age in April and keeps earning €2,500 a month. From May, eight months qualify and the ceiling falls to €16,000. Pay from May to December is €20,000, of which €16,000 is tax-free. January to April is fully taxable. From the following year the full €24,000 applies.
For expats: what this does and does not cover
The Aktivrente is part of German income tax law. It helps if your employment income is taxed in Germany; it says nothing about how another country taxes your pay. The standard age that triggers it is the German one, 67 for anyone born from 1964, regardless of the pension age in your home country.
New points from your pay
If pension contributions are paid on your pay while you draw a pension, you earn further pension points (Entgeltpunkte). They are added to the pension in payment each 1 July of the following year (section 66(3a) SGB VI). A part-time year on €18,000 brings 0.3465 points and €14.73 more monthly pension; a year on €30,000 brings 0.5775 points and €24.56. Not much, but for life and rising with each pension increase. The mechanics are on pension points explained.
Working without drawing: the deferral increase
The alternative to pension plus pay is deferral. Work past the standard age without claiming your pension and it rises by 0.5 % per month (section 77 SGB VI). After twelve months that is 6.0 %, after 24 months 12.0 %; €1,500 becomes €1,590.00 or €1,680.00. The tax-free Aktivrente applies in both cases. Which route pays off depends on life expectancy and your tax bill; see retiring later.
Partial pension: dosing pension and work
Between full pension and none sits the partial pension (Teilrente): draw part of your old-age pension, at least 10% of the full amount (section 42 SGB VI), and the rest later. With no earnings cap left it no longer avoids cuts, but it can still steer your tax bill and the reduction. More under partial pension.
Where income is still offset
Two pension types still have limits. Reduced earning capacity pensions (Erwerbsminderungsrente) have their own earnings limit, and going over it cuts the pension (section 96a SGB VI); the amounts are on disability pension and earnings. On a widow’s or widower’s pension, own income above an allowance is offset at 40 % (section 97 SGB VI), after a flat 40 % deduction from pay (section 18b SGB IV).
| Widow with her own pay | Monthly amount |
|---|---|
| Gross pay | €2,500 |
| Net income after flat 40 % deduction | €1,500.00 |
| Allowance without children, from July 2026 | €1,122.53 |
| Offset (40 % of the excess) | €150.99 |
A survivor who also draws an old-age pension of their own must add both incomes together. Widow’s pension income test works through the full case.