The New Active Pension from 2026: What Retirees and Pensioners Need to Consider

Upon entering retirement, retirees and pensioners remain subject to income tax liability. This means they must file an income tax return once their income exceeds certain allowances. The Active Pension Act, which came into effect in 2026, offers some benefits for retirees and pensioners who engage in employment subject to social security contributions after reaching the standard retirement age.

Requirements of the New Active Pension

Tax Exemption

The new active pension allows retirees and pensioners to receive income from dependent employment up to an amount of €24,000 per year tax-free, which corresponds to €2,000 per month. This regulation represents an allowance, so only income above this amount becomes taxable. An incentive for retirees to continue working even in retirement.

Standard Retirement Age

The tax exemption only applies once the statutory standard retirement age for pension receipt has been reached. For those born from 1964 onwards, this is at the completed age of 67. The benefit applies regardless of whether a pension is already being received or if it is a partial pension. Early retirees or employees in partial retirement are excluded from the regulation.

Eligible Activities

The tax exemption applies exclusively to activities subject to social security contributions within the framework of dependent employment. Self-employed individuals, tradespeople, and civil servants who continue to work in their civil service position beyond the standard retirement age are excluded from the benefit.

Special Considerations for Various Employment Relationships

- Shareholder-Managing Directors: In the case of a shareholding of over 50%, shareholder-managing directors are not eligible.

- Marginal Employment and Midi Jobs: Mini-jobs are not covered by the active pension, whereas midi jobs are.

- Contracts for Work: Retirees are not eligible for the active pension in the case of self-employed activities. It is recommended to enter into an employment relationship instead.

Multiple Employment Relationships

The allowance of €2,000 per month applies to each employment relationship. Multiple, consecutive employment relationships can be eligible within a year.

Social Security Contributions

Within the framework of the active pension, tax-free income remains fully subject to contributions. Contributions to health and long-term care insurance must also be paid from tax-free wages. The employer bears the contributions to pension and unemployment insurance.

Wage Tax Deduction

If the requirements for the active pension are met, the employer does not need to deduct wage tax for the tax-free amount. A wage tax calculation is only carried out for the taxable wages that exceed the allowance.

Deduction of Work-Related Expenses

Work-Related Expenses in Connection with Tax-Free Income

Work-related expenses associated with tax-free income cannot generally be additionally claimed to reduce taxes. In the case of a mix of tax-free and taxable income, the work-related expenses must be allocated.

Standard Deduction for Work-Related Expenses

The standard deduction for work-related expenses of €1,230 can also be fully applied within the framework of the active pension, regardless of whether costs were actually incurred.

Overall, the active pension from 2026 offers retirees and pensioners the opportunity to earn tax-free income from employment. It is advisable to keep an eye on the exact requirements and regulations to benefit from the tax advantages.