German Mini-Jobs Hit by Triple Tax Rise as Coalition Forges Ahead with Sweeping Reform
Published on 07/03/2026 at 20:13 | Redaktion boerse-global.de
For the roughly 6.8 million people working on Germany's signature low-hour contracts, a quiet change in the fine print could cost them more than €200 a year. Under a 34-point reform agreement reached by the CDU, CSU and SPD coalition committee at the end of a two-day meeting, the flat-rate tax on so-called Minijobs will jump from 2 percent to 5 percent. Although the employer officially foots the bill, the decision explicitly allows them to pass the extra cost onto the worker, leaving the net pay of many part-time employees lower while the job itself remains tax-free for the employee.
Take a typical monthly wage of €603. The tax burden rises from €12.06 to €30.15 — an annual hit of roughly €217. And that is not the only increase on the horizon. The government also plans to lift the employer's health insurance contribution from 13 to 17.5 percent. Analysts now predict that total social contributions on mini-jobs could top 38 percent by 2027.
The mini-job changes are part of a much wider tax and labour overhaul scheduled to take effect on 1 January 2027, with an annual relief volume of around €10 billion. Families will see some gains: the basic tax-free allowance, child benefit and the child tax allowance are all being raised. A household earning €60,000 a year with two children stands to keep up to €600 more annually.
But the same package introduces several stiffening measures. A new wealth tax — nicknamed the Reichensteuer — kicks in at 45 percent for incomes above €250,000 and climbs to 47 percent above €280,000. The popular craftsmen's bonus (Handwerkerbonus), which lets households deduct a portion of tradesmen's labour costs, shrinks from 20 to 15 percent, with the maximum claim falling from €1,200 to €900. On the labour side, the phone-based sick-note system is being scrapped — employees must present a doctor's certificate from day one of illness. At the same time, the maximum duration for fixed-term contracts without a specific reason is being extended to 48 months.
The political fight over the future of Minijobs remains unresolved. On 23 June, the pension commission recommended abolishing all mini-jobs except those held by students. The coalition committee did not adopt that proposal, and Chancellor Friedrich Merz kicked the final decision to the autumn. The question of mandatory pension insurance contributions also stays open. Since 1 July, mini-jobbers have been allowed to voluntarily pay 3.6 percent of their income into the state pension pot, but the commission had argued for compulsory contributions without an opt-out.
Leading labour experts voiced concerns. Andrea Nahles, head of the Federal Employment Agency, warned that Minijobs often create a financial incentive against taking up fully social-security-covered employment. Labour market researcher Ulrich Walwei highlighted the high risk of low pay in the sector. In contrast, employers' president Rainer Dulger broadly welcomed the reform as a necessary step. Industry groups representing hospitality, agriculture and farmers warned strongly against abolishing mini-jobs, stressing their role in providing operational flexibility.
A final decision on further flexibilisation of working hours has been put off until later this year.
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