Increase in social contributions for 2020: high earners will pay much more
As usual, contribution ceilings for social security will rise again next year. But thanks to particularly strong growth in salaries in Germany this year, the limits are going up by more than usual. For high wage earners, the change could be costly.
Social security contribution rates in Germany go up in 2020
It’s that time of year again - the federal government has recently laid out the new salary limits for social security payments, meaning that plenty of high-wage earners and their employers will have to pay more for statutory health insurance, pensions, long-term care insurance and unemployment insurance next year.
Under the current system, anyone working in Germany contributes a percentage of their wages to social security, up to a maximum income threshold that is recalculated annually. This limit is set to increase significantly next year, after an above-average rise in salaries in Germany in 2018. The change will affect anyone who earns more than 4.538 euros per month, or 54.450 euros per year.
Employees could pay up to 550 euros extra per year
Accordingly, the income threshold for health and long-term care insurance will increase nationwide by 150 euros to 4687,50 euros per month. For pension and unemployment insurance, it will increase in the West by 200 euros to 6.900 euros per month, and in the East by 300 euros to 6.450 euros per month.
The new contribution rates could cost high earners up to 551,76 euros extra per year - not including any additional charges (Zusatzbeiträge) individuals might pay to their health insurance.
The so-called compulsory insurance ceiling will also be increased significantly in 2020. To be allowed to switch from statutory to private health insurance, you must earn a minimum of 62.550 euros per year - an increase of 18.000 euros.