The two main candidates to be next German chancellor, Social Democrat Olaf Scholz and the Christian Democrats' Armin Laschet, are practically neck and neck after Sunday's election, according to exit polls.

One exit poll by broadcaster ARD put both on 25 per cent. Another poll by broadcaster ZDF indicated that the SPD is projected to win 26 per cent of the vote, while the Christian Democrats (CDU) and their Bavarian sister party the Christian Social Union (CSU) is projected to win 24 per cent.

The small margin indicates the distribution of seats in the Bundestag will be very close, under Germany's dual voting system where voters choose both an individual candidate, and a party.

Facing a future without long-time Chancellor Angela Merkel, the exit polls point to further uncertainty for Europe's biggest economy.

Two or perhaps three parties will have to form a coalition government, but it is not clear which parties will work together.

Minutes after the vote, SPD leaders said that they had a mandate to form a government. A CDU official said he also saw a way to a possible coalition, but that the party had overall seen a disappointing loss in its vote share.

In the last elections in 2017, the CDU/CSU won 32.9 per cent of the vote.

For the first time in its history, the Greens put forward a candidate for chancellor this year, but Annalena Baerbock saw her popularity slide during the campaign.

The Greens came in at about 15 per cent, according to the exit polls. They may still have a good chance of entering a coalition.

Merkel led the CDU/CSU bloc to victory in the last four elections, defining Germany's political culture for a whole generation.

She is the country's second-longest serving leader, after Helmut Kohl, who took Germany through reunification.

dpa