What Do Employees Need to Know About Kurzarbeitergeld in 2026?
Short-time work allowance (Kurzarbeitergeld / KuG) is a benefit paid by the Federal Employment Agency (Bundesagentur für Arbeit) in Germany. It replaces part of the lost net earnings when an employer has to temporarily reduce working hours. In this guide, we explain who is eligible, how the benefit is calculated, and why the progression clause (Progressionsvorbehalt) can lead to unexpected tax bills.
For detailed calculations, you can use our free short-time work calculator.
Who is Eligible for Kurzarbeitergeld?
Kurzarbeitergeld can be claimed if:
- Significant Work Loss: The employer proves a temporary, unavoidable reduction in working hours due to economic conditions or structural changes.
- Operational Criteria: The company employs at least one worker and a minimum percentage of staff is affected (usually at least 10% of workers lose more than 10% of pay).
- Personal Criteria: The employment contract must be active and not terminated.
Not eligible: Minijobbers, employees whose contracts have already been terminated, or those currently on parental leave.
How Is the Short-Time Work Allowance Calculated?
The short-time work allowance replaces:
- 60% of the lost net income (for childless employees)
- 67% of the lost net income (for employees with at least one child)
The calculation is based on the difference between your normal flat-rate net salary (Soll-Entgelt) and the net salary earned during short-time work (Ist-Entgelt).
Example Table: Short-Time Work Allowance at 100% Work Loss (Kurzarbeit Null)
The following table shows the monthly allowance for various gross salaries under tax class I (rounded estimates for 2026):
| Gross Salary/Month (Normal) | Flat-Rate Net | KuG 60% (No Child) | KuG 67% (With Child) | Loss vs. Normal Net |
|---|---|---|---|---|
| 2,000 € | approx. 1,480 € | approx. 888 € | approx. 992 € | approx. 40 % |
| 3,000 € | approx. 2,060 € | approx. 1,236 € | approx. 1,380 € | approx. 40 % |
| 4,000 € | approx. 2,600 € | approx. 1,560 € | approx. 1,742 € | approx. 40 % |
Why Is the Progression Clause (Progressionsvorbehalt) a Tax Trap?
Short-time work allowance is initially tax-free. However, under § 32b EStG, it is subject to the progression clause (Progressionsvorbehalt). This means that while the benefit itself is not taxed, it is added to your total income to determine the tax rate applied to your other taxable income (like your normal earnings during the rest of the year). This often results in a tax back payment (Nachzahlung) when you file your annual tax return.
Who Must File a Tax Return?
Any employee in Germany who receives more than 410 € of wage replacement benefits (such as Kurzarbeitergeld, Elterngeld, or Krankengeld) in a calendar year is legally obligated to file an annual tax return.
Sources: §§ 95-109 SGB III (Kurzarbeitergeld), § 3 Nr. 2 EStG, § 32b EStG, Federal Employment Agency brochures, as of 2026.