IInflation, economic uncertainty, wars: After the difficult years of the pandemic, 2023 did not bring any noticeable upswing for many people. And what will 2024 be like? Here is a small overview of important predictions and things that are changing:
Economy and purchasing power
The good news first: Numerous economic research institutes expect inflation to weaken significantly in the coming year. The Council of Economic Experts, for example, predicts an increase in consumer prices of 2.6 percent and moderate economic growth of 0.7 percent – this would actually reduce the inflation rate noticeably.
KfW chief economist Fritzi Köhler-Geib expects that the new year will therefore be better financially than previous years. “However, it will take some time before the real income losses of previous years are made up overall. If everything goes well, it could happen at the end of 2025,” she says.
Real wages have recently risen faster than consumer prices. Experts therefore expect an improvement in purchasing power and a recovery in consumers' moderate spending mood.
Minimum wage and citizen's allowance
The minimum wage will also go up for employees in 2024. It will rise by 41 cents to 12.41 euros on January 1st. Even if industry-specific minimum wages are set in collective agreements, many employees can look forward to an increase, including roofers, building cleaners, painters and nursing assistants and specialists. There is also a plus for trainees after the turn of the year. The minimum salary in the first year of training increases from 620 to 649 euros.
Citizens' allowance will also be adjusted in the new year. The standard rate is adjusted annually to reflect prices and wages. For more than five million adults and children receiving basic income, citizens' benefit will increase by an average of twelve percent. For single parents, for example, it is increased by 61 to 563 euros. Adults who live with a partner receive 506 euros.
Pensions and parental allowance
Pensioners in Germany will have more in their wallets from July 1, 2024. According to an official estimate, they can expect an increase of 3.5 percent. This emerges from a draft of the federal government's pension insurance report, which is currently still being voted on. The final value of the increase will be determined in the spring.
There is also a supplement for the disability pension: Anyone who retired between 2001 and June 2014 receives 7.5 percent more. If the start of retirement was between July 2014 and 2018, there is an increase of 4.5 percent. In total, around three million pensioners benefit. The additional income limit also increases.
Changes await young families. In the future, only parents who have a taxable income of less than 200,000 euros in the calendar year before the birth of their child will be able to receive this benefit. Previously the limit was 300,000 euros.
Steer
For citizens there will be more net than gross in 2024. The basic tax allowance, i.e. the income up to which no tax has to be paid, increases from 10,908 to 11,604 euros. The tax allowance for children will also be increased. The benchmark for the top tax of 42 percent rises to 66,761 euros, for comparison: in 2023 it was 62,810 euros.
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