New updates effective from January 1st
The new year brings a host of changes to Germany's tax, child benefit, citizen's allowance, housing benefit, and price brakes systems. These changes, primarily fiscal support measures and tax adjustments, have been introduced to address ongoing economic challenges, including the energy crisis.
Tax-related changes
From January 1, 2023, the German income tax system will continue to apply a basic tax-free allowance ("Grundfreibetrag"), which was increased recently for the 2024 and 2025 tax years. For single individuals, this allowance will be set at €12,096 in 2025, ensuring income below this amount is untaxed.
A draft law for amending the Minimum Tax Act aligned with OECD guidelines was released later in 2025, but this postdates January 2023 and thus is not part of the January 2023 changes.
Child Benefit
A €100 child support cheque was introduced early in 2022 to support families with children amidst rising costs.
Citizen's Allowance and Housing Benefit
While there were prior pandemic-related social support programs, such as the one-off payments to recipients of basic social income ("Hartz IV"), no direct 2023 changes are detailed in the current sources.
Housing Benefit
Housing benefit will be significantly increased, with the amount roughly doubling to 370 euros, effective from January 1st, 2023. This change is expected to benefit up to 2 million households, an increase from the previous 600,000.
Price Brakes (Price Caps and Energy Price Subsidies)
In response to the energy crisis, Germany introduced temporary reductions in fuel prices through tax cuts and a price cap for public transport at €9/month in 2022. The EEG surcharge (energy tax on electricity bills) was eliminated starting July 2022, easing energy costs for households by around €300 annually for a typical family.
Additional price brackets or subsidies on energy consumption and measures supporting heat pump installations and energy efficiency standards were legislated to support households and the market transition, effective from 2023 onward. However, the price brakes for gas, electricity, and district heating will not be immediately visible on your account until March.
Summary
While exact new tax rates and allowances directly starting January 1, 2023, are not fully detailed in the search results, the key fiscal policies include ongoing child benefit top-ups (€100 cheque), tax-free income thresholds increases already in place, temporary energy price reductions (fuel tax cuts and public transport subsidies), elimination of the EEG energy surcharge, and broader subsidies for energy efficiency.
No explicit new citizen's allowance or housing benefit regulations specifically effective from January 1, 2023, are described in the current sources; the support focus is mainly on energy cost relief and child support. The child benefit and the maximum amount of the child supplement have both been increased to 250 euros per child, effective from January 1st, 2023.
The year 2023 commences on January 1st, and these new regulations take effect from this date. Your salary will be left with more money in 2023 due to reduced tax payments, and the number of households eligible for housing benefit has significantly increased. Citizen's allowance is replacing Hartz IV in stages, starting from an unspecified date. The specifics of the five new regulations are provided in the points above.
Finance-related changes in the German tax system include an increase in the basic tax-free allowance for single individuals, set at €12,096 in 2025, ensuring income below this amount is untaxed. In the realm of business, housing benefit will be significantly increased, with the amount roughly doubling to 370 euros, effective from January 1st, 2023. This change is expected to benefit up to 2 million households.
