Comprehensive German Business Reforms to Boost Economy and Support Workers in 2026

The German government is set to implement a wide-ranging package of reforms in 2026 aimed at stimulating economic growth, supporting workers and retirees, and easing the financial and bureaucratic burden on businesses, particularly small and medium enterprises.

Central to these reforms is a significant reduction in bureaucracy intended to alleviate the economy by around 25%, equating to an estimated €16 billion, as announced by the coalition government. Legislative approval is expected from both the Bundestag and Bundesrat for many of these measures.

Key changes include raising the minimum wage to €13.90 per hour starting in 2026, with plans for a further increase to €14.60 in 2027. Additionally, the minimum wage for roofers will rise. Retirees continuing to work will benefit from an increased tax-free allowance, enabling them to earn up to €2,000 monthly without additional taxation.

Economic relief efforts also feature a simplification of credit approval processes for small and medium-sized enterprises, designed to improve financial accessibility and foster growth within this sector.

However, consumers will face higher costs due to an increase in the CO2 tax on heating oil and gas, affecting expenses for those relying on these fuels. Other reforms encompass adjustments to child benefits, pension rules for disabled individuals, and the introduction of a digital handcraft card to streamline processes.

The government has pledged to keep the public continuously informed about the progress and further details of these reforms.

These measures collectively reflect Germany's ambitious agenda to rejuvenate its economy, support its workforce, and streamline operations for businesses in the coming year.