The most important thing in brief
- Tax Declaration: Many employees can deduct various expenses
and save money. Submitting a tax return can therefore be worthwhile.
- Deadlines: If filing is mandatory, the deadline for most
taxpayers is typically July 31 of the following year. For the 2025 tax year,
the return is due by July 31, 2026—unless a tax advisor is involved.
- Retroactive Filing: If you are not required to file, you
can still submit tax returns retroactively for the past four years—until the
end of the current calendar year.
Tax Deductions: What You Can Reclaim from Your Income Tax
The amount of tax you owe depends on your income level. As an employee, taxes are typically
deducted in advance directly from your gross salary. If you've overpaid, you can recover the
excess by submitting a tax return. The tax office will reimburse the excess amount.
The term “tax deductible” in this context refers to income tax. Corporate tax, which applies
to businesses, is not discussed here. Likewise, expenses related to rental properties are
not covered.
Example: How Tax Calculation and Refund Work
Gross income (monthly) |
€4,000 |
Gross income (annually) |
€48,000 |
Tax-deductible expenses |
€4,000 |
Taxable income after deductions |
€44,000 |
Individual income tax rate |
30% |
Tax refund (30% of €4,000 in deductible expenses) |
€1,200 |
- Taxes are withheld from monthly gross income (e.g., €4,000), totaling
€48,000 annually.
- Deductible expenses reduce taxable income (e.g., €4,000 lowers it to
€44,000).
- The tax office recalculates based on the reduced taxable income after
the tax return is filed.
- A refund equals the tax rate applied to deductions—e.g., 30% of €4,000
= €1,200 refund.
Four Years to File Retroactively
Those who are not obligated to file an income tax return can submit a voluntary tax
declaration retroactively for up to four years after the end of the tax year. The Federal
Statistical Office calculates the average tax refund once a year. To include voluntarily
submitted tax returns, the data refers to the tax year that ended four years prior to the
time of data collection. For example, employees received an average refund of €1,063 from
the tax office for the 2020 tax year (Destatis evaluation).
Want to invest your tax refund or use it to build long-term wealth? Take advantage of
attractive interest rates and return opportunities with WeltSparen’s offers.
Fixed Term
Deposit
Secure attractive interest rates up to 3.15% p.a.
Call Money
Save flexibly and earn up to 2.35% p.a. Many offers include a savings plan.
Asset Management
Invest globally in over 8,000 stocks with a target return of up to 7.30%
p.a.
ETF Rürup
Save for retirement efficiently and deduct over €29,000 from taxes this
year.
Checklist of Tax Standards: What Employees Can Generally Deduct
Home Office
If the home office is the main place of work, the proportional rental costs for the room are
fully tax-deductible. The requirement is that the room is used almost exclusively for work
purposes.
A desk in the living room does not turn the living room into a home office. Therefore, the
square meters used within the living room cannot be deducted.
If working from home is only partial, the rental cost for the home office can be deducted up
to a maximum of €1,260 per year (as of 2025). Partial use may apply in the following cases:
- Working from home twice a week because the company uses shared desks
("hot desking").
- Teachers who work primarily at school but prepare lessons at home.
- The home office is used for a side job, but not the main job.
Home Office Flat Rate: How Long Can It Be Used?
Temporary Regulation Until January 1, 2022
Due to the COVID-19 pandemic, the Bundestag introduced a special home office flat rate. Until
January 1, 2022, employees could deduct up to €600—even if they only worked at their kitchen
table. However, this amount counted as part of the general €1,000 allowance for work-related
expenses, which meant only those who exceeded that amount benefited.
New Regulation from 2023 Onward
Despite the pandemic ending, the home office flat rate was extended. Starting with the 2023
tax year, the per-day allowance increased from €5 to €6, and the maximum number of eligible
days rose from 120 to 210. This raises the maximum deductible amount to €1,260 per year.
Unlike the previous rule, it is now sufficient that most of the working day is spent at home.
"Most" is understood in terms of time—meaning more than half the day must be worked from
home. The home office flat rate still counts toward work-related expenses.
With the general work-related expenses allowance increased to €1,230 from 2023, the €1,260
home office flat rate exceeds it by €30, which results in a tax benefit.
Skilled Trades Services
If professional tradeswork is performed in your home or apartment, you can deduct 20.00% of
the labor costs from your taxes—up to a maximum of €1,200 per year.
Example: You pay €3,000 for professional trades services, and the tax office
credits you 20.00% of that—so €600. If you pay €8,000, the 20.00% share would be €1,600—but
the maximum tax credit remains capped at €1,200.
Guidelines:
- Only labor and travel costs are deductible—not material costs.
- Trades services must be paid via bank transfer to qualify. Cash payments are
not deductible.
- The services must be performed in your primary residence.
- Services funded by public grants (e.g., through KfW loans) are not eligible
for deduction.
Household-Related Services (e.g. Domestic Help)
You can deduct 20.00% of the costs for household-related services from your
taxes, up to a maximum of €4,000 per year. These services include domestic
help or outpatient care services, provided that the care was paid for and used privately.
Services such as pet sitting or plant care during a vacation also qualify as
household-related services.
Guidelines:
- Only the labor costs and travel expenses of the service provider are
deductible — not material costs.
- The services must be performed at your main residence. Services at
other properties are not deductible.
- Costs must be verifiable by invoice.
Relocation Expense Allowance
Costs for a moving company or a real estate agent can be deducted from taxes. However,
certain conditions must be met—at least one must apply. For example, the relocation must be
job-related or result in a verifiable shortening of the commute to work. The following
amounts apply for the relocation expense allowance:
Relocation Date |
For Individuals |
For Each Additional Person (Spouse / Civil Partner / Child) |
For Individuals Without Prior Own Residence |
Until 29 February 2024 |
€886 |
€590 |
€193 |
From 1 March 2024 |
€964 |
€643 |
€177 |
Income-Related Expenses (e.g. Work Equipment / Seminars)
Income-related expenses include costs incurred for professional reasons. These may cover
professional literature, office furniture, devices such as computers and smartphones,
telephone costs, travel expenses, as well as seminars and training courses. The home office
is also included.
Examples:
- Travel costs cover commuting by car, public transport, or bicycle.
Either actual costs or the flat-rate mileage allowance can be claimed.
- Devices and work equipment can be fully deducted if they cost under
€952 (i.e. €800 plus 19% VAT). Otherwise, they must be depreciated over several years
according to the depreciation table (AfA).
- Telephone costs are 100% deductible with itemized proof. Without proof,
you may deduct 20% of the costs up to a maximum of €20 per month.
- Home office expenses are deductible up to €1,260 per year if you work
from home part-time.
- Travel expenses include a meal allowance: €28 for every full 24-hour
travel day, otherwise €14. No allowance for trips under 8 hours.
Additionally, costs for cleaning professional clothing qualify. If you use a
dry cleaner and the receipt is marked "work clothing," you can deduct the full amount. If
washing at home, you can claim €0.76 per kilogram of colored laundry for a single-person
household.
(As of 2025)
Commuter Allowance for Work Distance
Calculation basis: The commuter allowance is based on the distance in
kilometers between your primary residence and your regular place of work. Additionally, the
exact number of days you commuted to the workplace is considered.
For each of those days, the one-way distance in kilometers can be deducted at a flat rate of
€0.30 per kilometer. For example, if you commuted to work on 100 days and the distance is 10
kilometers, you can claim a tax benefit of €300. The duration of your stay at the workplace
is irrelevant.
Calculation: 100 days × 10 kilometers × €0.30 = €300.
(Status: 2025)
Due to increased energy prices, the commuter allowance can be increased to
38 cents starting from the 21st kilometer of a route starting in 2022. This increase
will apply until 2026.
Vehicle Tax
As a private individual, vehicle tax cannot be claimed in your income tax return. However, if
the vehicle is also used for professional purposes, it is considered a mixed expense under
tax law. In the case of frequent business use, the vehicle tax is generally deductible. A
record of business use is required—this can be proven by maintaining a logbook. If business
use is less than 10.00% of the total usage (calculated based on mileage), the vehicle is
considered privately used and the tax cannot be deducted.
Entrepreneurs and self-employed individuals can fully deduct vehicle tax for company cars as
a business expense, provided the car is used exclusively for business purposes.
Statutory Pension Insurance
You can declare your contributions to the statutory pension insurance in your tax return as
special expenses, as they are considered retirement provisions. Due to the gradual increase
in the deductible amount, from the 2023 assessment year onward, you can claim 100% of your
contributions for tax purposes. In 2025, the maximum allowance is €29,344. The exact
contribution amount is stated on your income tax certificate.
Private Retirement Provision, e.g., Riester / Rürup
For the Riester pension, 4.00% of the annual gross income is tax-deductible, up to a maximum
of €2,100 per year. Any subsidies received are deducted by the tax office from this amount,
and the remainder is offset against your tax liability.
For the Rürup pension, up to €29,344 can be deducted in 2025, of which
100.00% is recognized by the tax office. This maximum limit applies to both
Rürup and statutory pension insurance contributions.
(Status: 2025)
Tax deduction for Rürup
pension
To receive the full Rürup allowance, the difference between contributions to the statutory
pension insurance and the maximum annual limit is calculated. The Rürup pension and
statutory pension insurance are counted together, as both are considered state-supported
retirement provisions.
Statutory and Private Health Insurance
In Germany, contributions to statutory health insurance (GKV) and private health insurance
(PKV) can generally be deducted from taxes. The law allows for two scenarios:
- The total annual contributions are below €1,900 for employees, retirees, and persons
with civil servant benefits. For the self-employed, this threshold increases to €2,800
(as of 2025). Private insurance contributions such as liability, accident, dental
supplementary, or daily sickness allowance insurance can be deducted up to these limits.
- If annual contributions exceed €1,900 or €2,800 respectively, only the actual health
insurance contributions (basic coverage) are deductible. Additional private insurance
contributions are not deductible.
Private health insurance premiums that exceed basic coverage are not
tax-deductible. This includes, for example, dental supplementary insurance or private
long-term care insurance.
Example: You are an employee and paid €1,500 to your health insurer. You
still have €400 left to deduct additional insurances. Or: You paid €2,100 to your health
insurer. You can deduct the full amount, but further insurances are not tax-deductible.
Healthcare Expenses, e.g. Medication / Dental Prostheses / Glasses
Certain health-related expenses not fully covered by health insurance—such as for medication,
dental prostheses, or prescription glasses—are considered “extraordinary burdens” for tax
purposes. However, the law defines a “reasonable personal contribution” which cannot be
deducted. Any expenses exceeding this threshold may be recognized by the tax office.
The reasonable personal contribution is determined based on income level, marital status, and
number of children. The table below outlines the percentage rates that apply to this
deductible threshold.
Marital Status |
Up to €15,340 income |
€15,341 to €51,130 income |
Over €51,131 income |
Not married |
5.00% |
6.00% |
7.00% |
Jointly assessed without children |
4.00% |
5.00% |
6.00% |
Jointly assessed with up to two children |
2.00% |
3.00% |
4.00% |
Jointly assessed with three or more children |
1.00% |
1.00% |
2.00% |
Extraordinary expenses are all healthcare costs paid out of pocket, such as for
medication,
rehabilitation, dental prosthetics, glasses, and more. The costs for a nursing home are also
included here.
Example of a reasonable personal contribution: You are married and earn €70,000 gross per
year. For up to €15,340 of the €70,000, a personal contribution rate of 4.00% applies.
Subtracting the already accounted for €15,340 from €70,000 leaves €54,660. A rate of 5.00%
is then applied to this amount. Your total “reasonable personal contribution” would
therefore be €2,733 annually. Only expenses exceeding this amount are usually recognized by
the tax office.
Private school / university costs
If children attend a private school, parents can deduct 30.00% of the costs, up to a maximum
of €5,000. University tuition, however, cannot be deducted.
Childcare costs
Childcare expenses – such as for kindergarten, babysitters, or other external care – can be
claimed per child as a tax deduction. Up to 80% of childcare expenses can be deducted, with
a maximum of €4,800 per year. This only applies if the child is under 14 years old. The age
limit increases to 25 for children with physical or mental disabilities who require ongoing
care. The tax office may request supporting documentation such as invoices and payment
proofs.
(As of 2025)
Donations
Donations are tax-deductible up to €300 per donation without an official receipt. However,
proof is required that the donation was transferred to a verified donation account. For
amounts above €300, an official donation receipt from the recipient organization is
necessary.
Legal Protection Insurance
A legal protection insurance policy can be claimed for tax purposes, provided it covers
professional legal matters, such as employment-related legal protection. If the policy
includes broader coverage, only the portion related to employment may be deducted.
Civil Litigation
The costs of a civil lawsuit can also be deducted if the case has a "sufficient chance of
success" and is directly tied to securing one’s livelihood. For example, a lawsuit against
an insurer regarding the payout of disability or accident benefits may qualify.
Taxes can also be reduced when saving — for example, on earnings from call money or
fixed-term deposits. In Germany, these capital gains are subject to withholding tax. By
submitting an exemption order, taxes can be saved through the saver’s allowance. This
allows up to €1,000 per year to remain tax-free for individual filers and up to €2,000
for married couples and registered partners (as of 2025).
Save Now
How Much Taxes and Contributions Germans Pay Over Their Lifetime
We calculated how much the average German pays in taxes and contributions throughout their
life, and what services the state provides in return. This is an attempt to quantify the
lifetime contribution of German citizens — purely in financial terms.
- On average, taxes and contributions amount to €814,212 per person — excluding
additional employer-paid payroll taxes.
- 36.00% of that total comes from income tax and solidarity surcharge (€293,247),
followed by €154,416 in VAT and approximately €139,390 in health insurance
contributions.
- The average lifetime income in Germany is €1,888,076 for both women and men, meaning
the average tax and contribution burden is 43.10%.
- On average, Germans become net contributors at age 24; after age 65, they begin
receiving more in services than they pay in.
(Sources:
IW Report 07.2022, Dr. Martin Beznoska, Federal Statistical
Office, WeltSparen Calculations
)
Category |
Amount |
Percentage |
Income Tax and Solidarity Surcharge |
€293,247 |
36.00% |
Value-Added Tax (VAT) |
€154,416 |
19.00% |
Health Insurance |
€139,390 |
17.10% |
Pension and Retirement Contributions |
€116,189 |
14.30% |
Energy Tax |
€38,047 |
4.70% |
Long-Term Care Insurance |
€24,973 |
3.10% |
Other Taxes |
€20,987 |
2.60% |
Tobacco / Alcohol / Betting Taxes |
€13,973 |
1.70% |
Unemployment Insurance |
€12,990 |
1.60% |
Total Taxes and Contributions |
€814,212 |
|
The Lifetime Financial Contribution of German Citizens
Compared to other OECD countries, Germany consistently ranks among the highest in terms of
tax and social security burdens. One notable exception is high net worth and inheritances,
which often bypass taxation in Germany. According to the OECD study in 2023, a single person
earning an average salary had to pay 47.90% of their income to the tax authorities, whereas
the OECD average was 34.80%.
For an average working household in Germany, the tax burden also stood at 47.90%, meaning
that out of every euro earned, only about 53 cents remain. As a result, most Germans start
earning for their own pocket only shortly before the second half of the year begins.
However, taxes and contributions also translate into benefits.
For this analysis, all taxes and social contributions were compared to personal-level
transfer payments and benefits in kind, broken down by age, as documented in the IW Report
07.2022.
(Sources: IW Report 07.2022, Dr. Martin Beznoska, Federal Statistical
Office of Germany,
WeltSparen Calculations)
Category |
Amount |
Percentage |
Pensions and Retirement Benefits |
€302,778 |
34.90% |
Healthcare |
€259,387 |
29.90% |
School |
€113,782 |
13.10% |
Child and Parental Benefits |
€50,016 |
5.80% |
Daycare |
€47,352 |
5.50% |
Unemployment Benefit II, Basic Security, Housing Allowance |
€39,211 |
4.50% |
University and Student Grants (BAföG) |
€31,577 |
3.60% |
Unemployment Benefit I |
€13,278 |
1.50% |
Other Benefits |
€10,569 |
1.20% |
Total Public Benefits |
€867,950 |
|
Net Positive Balance Over a Lifetime
Considering the current state of redistribution through taxes and contributions, individuals
in Germany end up with a net positive balance of €53,738 in transfers and public benefits
over their lifetime. The primary driver of this positive difference at the individual level
is the pay-as-you-go pension system, which has been supplemented with over €100 billion in
tax funds annually since 2020 — with the trend increasing.
Note: The analysis includes all taxes, social
contributions, transfers, and public benefits at the individual level, as simulated in
the IW Report 07.2022 up to the age of 82 for the general population. According to the
Federal Statistical Office, the average life expectancy in Germany is 81 years. The
income assumptions are based on a steady progression between the current median salaries
from Stepstone for individuals aged 20, 30, 40, 50, and 60, with a career starting at
age 25 and retirement at 67. From age 60, income remains constant until retirement. Data
collected on July 11, 2022.
Note: The contents of this page are for general
informational purposes only and do not constitute tax advice. For detailed information
or individual clarification of tax-related matters, we recommend consulting a tax
advisor or another person qualified under § 2 StBerG.