After one year in office, Chancellor Friedrich Merz’s coalition government has achieved the following
- passed 190 laws,
- cut energy costs by around €10 billion per year,
- raised the minimum wage to €13.90 per hour, and
- put a €500 billion infrastructure fund to work.
What the energy cost reductions mean for you
The main changes are
- Abolition of the gas storage levy (Gasspeicherumlage)
- Lower network fees (Netzentgelte).
- Manufacturing companies and agricultural businesses received relief through a reduction in the electricity tax (Stromsteuer).
- Reduced the mineral oil tax (Mineralölsteuer) by 17 cents per liter.
- Strengthened antitrust law through Kraftfahrtstoffmaßnahmengesetz to pressure fuel stations to pass savings on to consumers.
Minimum wage rises to €13.90
The statutory minimum wage (gesetzlicher Mindestlohn) rose to €13.90 gross per hour on January 1, 2026. More than six million workers benefit from this increase.
NOTE: Mini-job income thresholds and social security contribution rules are linked to the minimum wage. If you have a mini-job, check whether your agreed working hours or gross monthly income threshold need adjusting after this change.
€500 billion infrastructure fund
By the end of 2025, the federal government had deployed €24 billion from this fund. Federal investments for 2025 reached €87 billion. This is a 17% increase on 2024.
The plan for 2026 raises this further to over €120 billion.
The fund finances roads, schools, digital infrastructure, security authorities, and public administration modernization. These projects had been blocked for years under tight budget constraints.
Special tax incentive program
Launched a tax incentive (steuerliche Investitionssofortprogramm) on July 19, 2025. It allows companies to apply degressive depreciation of up to 30% for equipment investments made between July 1, 2025, and December 31, 2027. The government describes this as the first corporate tax reduction in more than 15 years.
Migration policy
For the first time since 2015, Germany is no longer the European country receiving the most asylum applications. It now ranks fourth, behind France, Spain, and Italy.
The government attributes this to
- Consistent border rejections,
- Abolition of fast-track naturalization after three years
- Elimination of family reunification for persons holding subsidiary protection (subsidiärer Schutz).
Rental rules extended, pensions stabilized, Bürgergeld replaced
- The rent price brake (Mietpreisbremse) has been extended. This continues limits on rent increases above the local reference rent in tight housing markets. If you live in a city like Berlin, Hamburg, or Munich, this extension maintains the cap on how much your landlord can charge when you sign a new lease.
Your rights as a tenant when the landlord increases your rent in Germany ->
- The pension level (Rentenniveau) has been locked at 48% through 2031.
- Basic income support system (Bürgergeld) is replaced by a new Grundsicherung (basic security) model.
- Child allowance (Kindergeld) will be paid automatically from birth.
What does the German government plan for 2026?
- The government plans federal investment of over €120 billion in 2026 alone. The 2027 budget framework was also approved by the Cabinet on April 29, 2026. This contains the full defense and infrastructure spending projections for the years ahead.
- Health insurance reform
