The new year brings with it a number of changes in payroll tax and social security law. We have summarized the most relevant changes in 2021 for you here. Here are the most important facts and key data:
- Increase in the general minimum wage
- Elimination of solidarity surcharge
- Electromobility: increase in monthly flat rates for charging
- Increase of the distance allowance
- Mobility bonus as an alternative to the distance allowance
- Increase in relief amount for single parents
- Contribution rates and levy rates in 2021
Changes 2021 – the overview:
Increase in the general minimum wage
On October 28, 2020, the German federal cabinet passed the Third Minimum Wage Adjustment Ordinance. This will bring the statutory minimum wage to
- 1.1.2021 initially to EUR 9.50 gross per hour worked and will then rise in further steps.
- 1.7.2021 to EUR 9.60 gross,
- 1.1.2022 to EUR 9.82 gross and as of
- 1.7.2022 to EUR 10.45 gross.
Discontinuation of solidarity surcharge
From 2021, the solidarity surcharge will no longer be levied for around 90% of wage and income tax payers. To this end, the threshold amounts of income tax up to which no solidarity surcharge is levied will be increased: for spouses or in tax class III from EUR 1,944 to EUR 33,912 per year, and in all other cases from EUR 972 to EUR 16,956 per year.
The exemption limit is followed by a kind of “sliding zone” (so-called “mitigation zone”), within which the solidarity surcharge payable only increases gradually to 5.5%.
Electromobility: Increase in monthly flat rates for charging
The free or discounted charging of the batteries of electric or hybrid electric vehicles at the employer’s premises is tax-exempt if the employer grants the benefit in addition to the remuneration owed in any case.
Benefits additionally granted by the employer for the company charging device for electric vehicles or hybrid electric vehicles temporarily provided for private use are also tax-exempt. This refers to so-called wallboxes for the rapid charging of electric vehicles. Tax-free charging at the employer’s premises and the provision of wallboxes no longer have to be recorded in the payroll account.
To simplify the tax- and contribution-free reimbursement of expenses for the electric charging of a company car at the employee’s home, the tax authorities allow monthly flat rates. From 2021 (until the end of 2030), increased flat rates will apply:
|Monthly flat rates||2020||2021|
|with additional charging possibility at the employer||20 EUR for electric vehicles 10 EUR for hybrid electric vehicles||30 EUR for electric vehicles 15 EUR for hybrid electric vehicles|
|without additional charging possibility at the employer||50 EUR for electric vehicles 25 EUR for electric hybrid vehicles||70 EUR for electric vehicles 35 EUR for electric hybrid vehicles|
Increase in the distance allowance
For the years 2021 to 2023, the commuting allowance will be increased by 5 cents to EUR 0.35 per commuting kilometer from the 21st kilometer. The temporary increase will be transferred accordingly to family home journeys within the scope of double household management. For the first 20 kilometers of travel between home and the first place of employment, the flat rate remains unchanged at EUR 0.30 per distance kilometer.
Employer subsidies for car use can be subject to 15% flat-rate tax up to the amount of the new commuting allowance.
Mobility bonus as an alternative to the distance allowance
From 2021, commuters who do not pay (income) tax due to their low income will have the option of choosing a so-called mobility premium as an alternative to the increased distance allowance from the 21st distance kilometer. It amounts to 14% of the increased flat rate; this corresponds to the entry tax rate in the income tax scale.
This also provides relief for those for whom a higher deduction for income-related expenses or business expenses does not result in corresponding tax relief.
The full EUR 0.35 from the 21st distance kilometer is included in the assessment basis for the mobility premium and not just the current increase of 5 cents. However, employees only benefit from both the income-related expenses and the mobility bonus if the EUR 0.35 from the 21st distance kilometer has or would have had a tax-reducing effect due to the fact that the employee’s flat-rate allowance is exceeded.
Increase of the relief amount for single parents
Single parents receive a tax relief amount of EUR 1,908 per year. For the wage tax deduction procedure by the employer, tax class II is formed as a wage tax deduction feature if the requirements for claiming the relief amount are met. Due to the higher care expenses especially for single parents in times of Corona and the expenses caused by this, the relief amount for single parents has been increased to EUR 4,008 for the years 2020 and 2021 and thus more than doubled.
In practice, this is implemented by means of an increase amount of EUR 2,100 for a limited period of time. In principle, the tax office already takes the increased relief amount for single parents into account for the years 2020 and 2021 in the wage tax and enters the increased amount for the first time as an allowance in the ELStAM, or the increased amount is taken into account in addition to an allowance that has already been created previously.
Contribution rates and levy rates in 2021
Uniform contribution rates apply to all health insurance funds:
- The general contribution rate remains unchanged at 14.6%. It applies to employees who are entitled to continued payment of wages for at least 6 weeks in the event of incapacity for work.
- The reduced contribution rate remains unchanged at 14.0%. It applies to employees who are not entitled to sick pay. These include, for example, employees who are not self-employed, employees whose employment is limited in advance to less than 10 weeks, employed disability or old-age pensioners, as well as early retirement pensioners and employees who are in a release phase as part of a flexible working time arrangement.
- The contribution rate for long-term care insurance remains unchanged at 3.05%. Employers and employees each pay half of the contributions, with the exception of Saxony. Here, the employer’s contribution is 1.025% and the employee’s 2.025%.
- The contribution surcharge for childless persons of 0.25% is borne by the employee alone.
- The contribution rate to unemployment insurance remains unchanged at 2.4%. Employers and employees each pay half of the contributions.
- The contribution rate for pension insurance remains unchanged at 18.6%. Employers and employees each pay half of the contributions.
- The insolvency benefit levy has been increased to 0.12% for 2021 (from 0.06%). The insolvency allowance levy is charged as a percentage of the remuneration subject to pension insurance (levy rate). The U3 levy is paid by employers alone. Public sector employers and private households are exempt from this.
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Do you still have questions about the changes in 2021?
If you have any questions about this or about wage tax and social security law in general, Ms. Pia Lösch, Head of the Wages & Salaries department, will be happy to assist you.
+49 89 547143
or by e-mail