What the zero increases in 2025 and 2026 mean for citizens’ income

The zero increase in the citizen's allowance had been looming because its amount is based on the subsistence level. This depends crucially on inflation, and the federal government significantly overestimated it last year. As a result, it increased the citizen's allowance by twelve percent. Economists are only expecting inflation of two percent for 2024. This year, Labor Minister Hubertus Heil (SPD) is correcting the error and the citizen's allowance is at zero.

“People in need must be helped,” said Labor Minister Heil on RTL and NTV: “But one thing is also clear: This is the minimum subsistence level, no more, but also no less.”

The background to this mechanism is the legally established calculation of the citizen's allowance. The previous increase took into account the peak of inflation. This is why the increase is unusually high. It would therefore remain lower in the current year, that was clear. A zero increase also seemed likely. The fact that it is now coming is “right,” said Heil.

Federal Justice Minister Marco Buschmann (FDP) had even wanted to reduce the citizen's allowance because it had increased too much in the previous year. However, this is impossible under current law: “Property protection prevents a reduction in the standard benefit levels – the amounts applicable in 2024 cannot be undercut in 2025,” a spokesman for the Ministry of Labor explained in response to a request from FOCUS online in December.

According to information from “Bild”, things are getting even worse for citizens’ allowance recipients. According to government calculations, there will also be no increase in benefits in 2026.

Single people will continue to receive 563 euros in citizen’s allowance per month in 2025

Due to the freeze(s), the citizen’s allowance rates remain unchanged.

• Single people continue to receive 563 euros per month.
• Adults who live with a partner receive 506 euros.
• For children and young people, the rates range between 357 and 471 euros, depending on age.

In addition, there are benefits for heating, housing and further education.

Citizens’ allowance recipients will be able to afford less in the future

For those receiving the citizen's allowance, the freeze means that they will be able to afford less by the end of 2025 than they could at the beginning of 2024. Inflation makes purchases more expensive. Their benefits remain the same. Their purchasing power has also fallen. Although they had significantly more purchasing power than expected after the citizen's allowance increase last year, it is now falling again.

You should plan ahead for this: cut expenses now. Save money if possible instead of spending it. Nobody knows how high inflation will be in the next few months. However, by the end of 2025, money will probably be even tighter for you than it is now. And there is no improvement in sight for 2026.

Reading tip: Being able to afford more in the long term – the “other people’s money” rule simply makes you financially independent

Tougher sanctions for missed appointments

Heil also announced tougher sanctions for those who refuse. Anyone who regularly makes appointments with job centers must expect cuts.

There are already corresponding rules in place. However, job centers criticize them as being too bureaucratic. Heil will simplify them. This means: keep appointments or it will be expensive.

Severe penalties for illegal work

Heil will also take tougher action against people receiving benefits who work illegally on the side. Social security abuse costs the federal government over 100 billion euros annually. Better data exchange between job centers and illegal work controls as well as tougher sanctions are intended to curb it.

Relief for the federal budget

The zero increase in the citizen's allowance relieves the strained federal budget. The federal government has budgeted 25 billion euros for direct citizen's allowance payments in the 2024 budget. In addition, there are funds for heating and accommodation. If the number of recipients remains the same, an increase in the citizen's allowance would have cost around 250 million euros extra per percentage point.