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

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 Allianz’s offers.

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:

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:

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)

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.

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.

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.

(Sources: IW Report 07.2022, Dr. Martin Beznoska, Federal Statistical Office, Allianz Calculations )

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, Allianz Calculations)

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 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.