Tax Deductions in Germany [Save Taxes]

Key takeaways

• There are several tax allowances and flat rates that you can deduct to save taxes in Germany.
• The income-related expenses are the most significant expenses that employees can use to recoup overpaid taxes.
• Since 2022, long-distance commuters will benefit from the increased commuting allowance of 38 cents from the 21st kilometer traveled.
• For the second home at the place of employment, you can deduct up to 1,000 € per month for rent, ancillary costs, and double home tax.
• You must file the income tax return by 31 July 2025 (filing the income tax yourself).

This is how you do it

• Separate your company and personal finances by having a separate business account. We find the following business bank accounts to be the best in Germany: Vivid*, N26*, Finom*, Fyrst*(in German only).
• Save the receipts of your expenses. You’ll need them to get the most out of your tax return.
• Ensure you pay the taxes on time. The tax office may charge penalties and interest if you miss the tax payment deadline, i.e., 31 July 2025 (filing the income tax yourself).
• Many online services help you file simple income tax returns in Germany. We find SteuerGo* and Wundertax* among the best tax software.
• We recommend consulting a tax advisor for complex tax returns. You can get a free quote from the tax advisor we recommend here. The tax consultant offers services in English.

Table of contents

While filing an income tax return, you must consider

• working from home,
• buying work equipment,
• trips to work,
• short-time work,
• child bonuses,
• flat-rate energy price,
• and many other aspects.

You may pay up to 45% tax in Germany based on your income. But the good news is you can get a significant amount back when you file a tax return.

In this guide, you’ll learn 32 ways to save taxes in Germany.

Gross Income vs. Taxable Income

Let’s first understand the difference between your income and taxable income. Your income is the money you earned in a particular year. It’s the gross amount you made.

We also refer to it as “Gross Income.”

On the other hand, “taxable income” is the “gross income” minus your “expenses” to earn that “gross income.”

What can be your possible tax deductions in Germany?

There are five main categories of expenses you can deduct to save taxes in Germany.

• Income-related expenses
• Household-related expenses
• Insurance costs
• Special expenses like donations, alimony, etc.
• Extraordinary expenses like funeral costs, supporting a relative in need, etc.

Income-related expenses are the most significant expenses you can claim to recoup overpaid taxes.

The tax office deducts a flat rate for employees (Arbeitnehmerpauschale) from employees’ income. This is 1230€ (as of 2025). This reduces your taxable income and thus saves taxes.

Moreover, if your professional expenses exceed the employee flat rate (Arbeitnehmerpauschale), you can use them instead to reduce your tax liability. Thus, collecting professional expense receipts from the beginning of the year is advisable.

In addition to these expenses, the German tax office offers several tax flat rates and allowances to reduce your tax burden. The best part is that you don’t need proof to apply these flat rates.

Some tax flat rates/allowances are applied automatically by the tax office. You have to claim others when filing the tax return. This is why it’s vital you know what allowances exist.

You can use online services to help you file and save income tax in Germany. We find Wundertax* and SteuerGo* among the best tax software out there.

If you have a complex tax return or filing it yourself makes you nervous, you should get advice from a tax consultant. Tax consultants are not cheap in Germany. Depending on your situation, they may cost between 800€ and 1500€.

However, a good tax consultant can save you a lot of money.

You can get a free quote from the tax consultant we recommend here. The tax advisor offers services in English.

Income-related expenses you can deduct to save taxes in Germany

Deduct travel costs to the office to save taxes

You can deduct travel costs from your taxes if you commute to work regularly.

• The tax office calculates travel costs based on the distance flat rate (Ent­fer­nungs­pau­scha­le) of 30 cents per kilometer. For example, if you drive 18 kilometers to work 230 days a year, you can deduct €1,242 (80 * 0.3 * 230) as travel costs from your taxes.
• The travel allowance increases to 38 cents starting from 21 kilometers.
• The tax office accepts 220 to 230 days for the distance allowance (Entfernungspauschale in German) with a five-day working week and 50 days more for a six-day working week.
• You can deduct the commuter’s flat rate (Entfernungspauschale) for the working days you travel to the office. It’s independent of how long you stay in the office. For example, you went to the office to attend a meeting and worked from home for the rest of the day. You can also deduct the commuter’s flat rate for this day.
• The distance allowance (Entfernungspauschale) applies regardless of the means of transport you choose. You can travel on foot, by bicycle, train, or bus.
• The tax office capped the distance allowance at a maximum of 4,500€ per year.
• The maximum cap doesn’t apply if you travel to work in your own or company car. However, you must be able to provide proof to claim for higher travel costs.

How do you claim costs?

When completing Appendix N, you must state the actual number of days you went to work. Keeping a calendar of when you traveled to the office is the best way to keep track of your travel expenses.

If the tax office requests further information, you can submit your travel entries and an employer’s certificate.

Company Car users

The tax office considers the use of a company car for private purposes a benefit in kind that you, as an employee, must pay tax on.

You can calculate the tax due via one of the two methods.

• The logbook (Fahrten­buch in German)
• Or the flat 1 percent rule.

If you drive the company car for personal use a lot, the flat 1 percent rule is often cheaper. The logbook may be more attractive if your company car is an expensive used car.

Thus, you should pick the method that is more cost-effective for you.

NOTE: You and your employer must decide which method to use at the beginning of the year. This is because the tax office doesn’t accept the logbook if you create it at the end of the year. 

Business trip expenses

You can deduct the travel cost of business trips from your income if you haven’t received reimbursement from your company.

You would get 14 € as additional meal expenses if you were on the road for more than eight hours on a business trip. The meal allowance increases to 28 € if your business trip lasts more than 24 hours.

The meal allowance increases further if you travel abroad. The increase depends on the country you travel to.

You can find a list of country-specific allowances in the Federal Ministry of Finance letter dated December 3, 2020.

There is also a flat rate for professional drivers who spend the night in their driver’s cabins. They can deduct 8 € per day as a meal allowance.

Home office cost

You can deduct all your home office costs from your taxable income. The only requirement is to have a dedicated room you use for office work at home.

The tax office has strict rules to determine whether you have a dedicated home office space. You may even have to provide proof to back it.

Suppose you don’t have a dedicated working space. In such a situation, you can deduct the home office flat rate (Homeoffice-Pauschale) to save taxes.

Home office flat rate (Homeoffice-Pauschale in German)

You can deduct up to 1260€ (in 2024 tax year) from your taxable income as a home office flat rate.

The home office flat rate benefits people who do not meet the strict requirements of a dedicated working space at home.

You can set 6 € (for the 2023 and 2024 tax year) for each working day you work exclusively from home. The tax office limited the number of home office days to 210 (for the 2023 and 2024 tax years) for tax purposes.

Thus, the home office lump sum is limited to 1260€ (in 2024 tax year).

The tax office considers the home office flat rate to be income-related expenses. Hence, they offset the “home office flat rate” against the “employee flat rate” (Arbeitnehmerpauschale), which is 1230€ (as of 2025).

Thus, you will enjoy the additional tax benefits from the home office flat rate if your income-related expenses exceed the employee flat rate.

Costs related to work equipment (Arbeitsmittel in German)

You can deduct the costs of the work equipment (e.g., office chair, printer, computer, etc.) you bought from your income tax. You can deduct these costs even if you don’t have a dedicated home office space.

• You can deduct the complete costs of the items you used at least 90% professionally.
• You can deduct 100% of your computer’s cost if you use it at least 90% for office work. The tax office may ask for proof. If you don’t have proof, you can deduct 50% of the computer’s cost.
• Items that cost more than 800 € net or 952 € gross (including 19% VAT) must be depreciated over their normal useful life. It is called Geringwertigen Wirtschaftsguts (GWG) in German.

Other income-related expenses (Weitere Werbungskosten in German)

You can enter other expenses related to your work in Appendix N.

They may be

• application costs
• travel expenses for business trips not reimbursed by the employer
• cost of books that you professionally need
• double housekeeping

You should keep all the invoices as small amounts quickly add up to a large sum. This way, you can save a lot on taxes.

You can use online services to help you file and save income tax in Germany. We find Wundertax* and SteuerGo* among the best tax software out there.

If you have a complex tax return or filing it yourself makes you nervous, you should get advice from a tax consultant. Tax consultants are not cheap in Germany. Depending on your situation, they may cost between 800€ and 1500€.

However, a good tax consultant can save you a lot of money.

You can get a free quote from the tax consultant we recommend here. The tax advisor offers services in English.

Second home expenses at the place of employment (Zweitwohnung in German)

You can deduct the second home expenses up to 1,000 € per month from your taxable income.

The expenses could be

• Rental costs
• Ancillary costs
• House tax on the second home

On top of the above expenses, you can also deduct the costs of furniture, lamps, curtains, etc.

The tax offices recognize up to 5,000€ as income-related expenses for furnishing and equipping the second home. Moreover, you don’t have to provide proof of furnishing expenses up to 5000€ (Federal Ministry of Finance letter dated November 25, 2020, text number 108).

You can also deduct work equipment, telephone, and internet costs. Of course, if your employer doesn’t reimburse the expenses.

Celebration costs (Feierkosten in German)

You can deduct the cost of celebration with your colleagues in your company from the taxable income. You can even claim entertainment expenses (Bewirtungskosten) under certain conditions.

Car accident on the way to work

If you have a car accident on the way to work, you can deduct all the non-reimbursed costs from your tax return.

These can be

• car repair costs you bear yourself,
• damage to clothing and objects,
• medical expenses,
• travel expenses to doctors and workshops,
• legal, court, and expert costs,
• expenses for rental cars, as well as salvage and towing costs.

Keep all the invoices, as the tax office may ask for proof.

Moving costs (Umzugkosten in German)

Moved to new residence due to professional reasons

Moved to a new city or changed residence within the same city?

You can claim the moving costs as income-related expenses for tax purposes. But the move should be for professional reasons.

For example,

• move to work as a young professional,
• changed jobs
• were transferred by the employer or
• your daily commute to work has been shortened by at least one hour due to the move.

You can submit the following travel costs for tax deductions.

• Cost of apartment viewings,
• brokerage costs,
• shipping costs,
• double rent, etc.

The tax office puts no limit on moving expenses. You can deduct all the costs during tax declaration as long as you have the proof.

You can apply for a flat-rate relocation fee in your tax return if you don’t have proof of expenses. The tax office revises the relocation flat rate every year. Thus, the date you moved determines which relocation lump sum applies to you.

Moreover, you can apply for a tuition fee lump sum in your tax return if your child needs private tuition because of moving to another federal state.

Moving for private reasons

You can deduct 20% of the labor and travel costs if you move for personal reasons.

In this case, the relocation expenses come under the “household-related service” (haushaltsnahe Dienstleistung in German) category.

If you must move for health reasons, you can submit the expenses as an “extraordinary burden” (außergewöhnliche Belastung in German).

NOTE: It’s vital that you know all the expenses you can deduct to save taxes in Germany. Even if you hire a tax advisor, you must inform the tax advisor about all your expenses. If you don’t know a particular expense can be deducted from taxes, the probability of you mentioning it to the tax advisor is very low.

Household-related expenses you can deduct to save taxes in Germany

Renovation costs for landlords/homeowners

When filing a tax return, you can deduct an apartment’s renovation, repair, and assembly costs from your income.

• You get back 20% of the labor and travel costs as a tax rebate. The tax office limited the labor and travel lump sum to 1,200 € per year. Thus, you can declare labor and travel invoices up to 6,000 € (20% of 6k = 1200 €) when filing the tax return.
• The craftsman’s equipment costs are also tax deductible but not material expenses.

NOTE: You must have invoices for all the costs incurred. And you pay the invoice via bank transfer instead of cash.

Other tax-deductible repair costs for house owners

According to a letter from the Federal Ministry of Finance (Bundesfinanzministeriums (BMF) in German) dated November 9, 2016, tax officials must also recognize the following items:

• Drain pipe cleaning
• Certain expenses for an expert, for example, for measurements on a stove, a gas boiler, or oil heating
• Leak test on sewage pipes
• Legionella test
• Complete chimney sweep costs
• TÜV control at the elevator
• Checking a lightning protection system
• Maintenance of the heating system

On page 25, the BMF letter lists which costs are eligible for a tax deduction. The letter also mentions which expenses fall into the category of craftsmen’s or household-related services.

Tenants may also deduct costs for household-related services

Tenants can enter all the labor costs for house repair or household-related services in their tax returns.

Usually, landlords transfer some of the house repair costs to the tenants. The landlords put such expenses in the utility bill. And you can enter these expenses in your tax return. This can save you much in taxes.

The household-related expenses could be

• expenses for the building’s caretaker (Hausmeister Service in German),
• stairway cleaning,
• the gardener,
• the chimney sweep,
• maintenance work,
• winter service, etc.

For the 2024 tax return, you can use the 2023 “service charge statement” (Ne­ben­kos­ten­ab­rech­nung in German) that you received in 2024.

Caregiver, cleaning help, pet care expenses

You can deduct the following costs during your tax return.

• Caregiver expenses
• Cleaning help costs
• Costs related to the care of your cat or other pet
• According to current case law, the costs for a dog walk service can also be included

The tax office requires the invoices for the costs incurred.

You can get back 20% of the total costs incurred. But the tax office put a limit of 20,000 € on such expenses. Thus, you can get a maximum of 4,000 € (20% of 20k) in a tax refund.

On top of it, you can get a tax refund of up to 510 € if you employ the household help as a mini-jobber.

Thus, you can get up to 4510 € (4000 € + 510 €) via the tax return.

Deduct insurance premiums to save taxes in Germany

Deduct social security contributions, insurance, and pension schemes

You deduct the following insurance contributions during tax declaration.

• pension insurance (Rentenver­si­che­rung in German)
• health insurance (Krankenversicherung in German),
• long-term care insurance (Pflegeversicherung in German),
• unemployment insurance (Arbeitslosenversicherung in German)

You can fully deduct the contributions to the statutory health insurance (without optional supplementary benefits). Similarly, you can deduct contributions to private health insurance. However, the tax office accepts contributions to basic coverage only.

If you paid for your child’s health and nursing care insurance, you can deduct it from your income tax.

Learn more about it in our guide on deducting health insurance costs from taxes.

Other tax-deductible insurances

The following insurances are also tax deductible if you took them before 2005.

• unemployment insurance (Arbeitslosenver­si­che­rung in German),
• disability insurance (Be­rufs­un­fä­hig­keitsver­si­che­rung in German),
• liability insurance (Haftpflichtver­si­che­rung in German),
• accident insurance (Unfallver­si­che­rung in German),
• and classic private life insurance (Privat Le­bens­ver­si­che­rung in German).

If you took any insurance because of your job or business, you could deduct the contributions as income-related or operating expenses (for the self-employed).

For example, professional liability or accident insurance if you travel frequently for your company.

Deduct contributions to pension plans (Altersvorsorgeaufwendungen in German)

You can also deduct the contributions to professional pension schemes or Rürup contracts. You can deduct 100% of your paid contributions while filing tax returns.

The maximum annual amount you can contribute to your Rürup pension is 27,566€ for singles and 55,132€ for married couples filing taxes jointly for the 2024 tax year and 29,344€ (singles) and 58,688€ (couples) for the 2025 tax year. And you can deduct all of it from your income tax return.

Similarly, you can deduct your contributions to the Riester pension plan. The tax office limited it to 2100€ for 2024 tax year.

NOTE: The tax office deducts the tax-free employer’s contribution from the pension contributions while calculating the tax returns.

You can use online services to help you file and save income tax in Germany. We find Wundertax* and SteuerGo* among the best tax software out there.

If you have a complex tax return or filing it yourself makes you nervous, you should get advice from a tax consultant. Tax consultants are not cheap in Germany. Depending on your situation, they may cost between 800€ and 1500€.

However, a good tax consultant can save you a lot of money.

You can get a free quote from the tax consultant we recommend here. The tax advisor offers services in English.

Special expenses you can deduct to save taxes in Germany

You can deduct 36 € (72 € for married couples or registered life partners who file tax returns jointly) as special expenses without proof. If you have proof, you can deduct complete costs from your taxes.

The special expenses include

• Church tax
• Donations
• Professional training expenses
• Maintenance payments to the ex-partner (“Unterhaltszahlungen an den Ex-Partner” in German)
• Tuition fees, etc.

Save tax as a student

While filing the tax return, you can deduct your tuition fee as a special expense. The prerequisite is that you start studying immediately after high school.

However, the tax office limited the amount you can deduct to 6,000 € per year.

You can also deduct the costs of further studies (e.g., master’s degree) as anticipated income-related expenses.

You also have the option to carry forward the study costs to later years. Hence enjoying the tax benefits in the future.

Deduct maintenance payments

You can deduct the maintenance payments you paid to your ex-partner. The tax office allows you to deduct up to 13,805 € as a special expense.

You can also claim the health and nursing care insurance costs (at least the basic protection) you paid for your ex to save taxes. Simply enter the payment amount in the attachment, “special expenses” (Anlage Sonderausgaben in German), and in attachment U in section A.

You also need the payee’s (your ex’s) signature and tax identification number. This procedure is called Realsplitting in German.

If your ex refuses to sign, the alternative is the deduction as an extraordinary burden. But unfortunately, the maximum amount you can deduct in this situation is 11,784 € (for the 2024 tax year).

Deduct donations as special expenses

You can deduct donations to a non-profit organization from your income to save taxes.

The tax authorities limited the tax-deductible donation amount to 20% of your total income. In addition, you must provide a donation receipt issued by the recipient to enjoy the tax benefits.

The tax authorities honor the donation to the following entities.

• Non-profit organizations
• Legal entities under public law, such as a university.

Every donation receipt pays off because special expenses reduce the taxable income as soon as they exceed the flat rate of 36 € (72 euros for jointly assessed persons).

A bank statement is usually sufficient proof of donations and membership fees of up to 300 €.

You can also use a bank statement as proof of donations of more than 300 €. However, the payment must go to a special account (Sonderkonto in German) and must be made within a fixed period.

Donations to political parties

You can deduct half of the donations to political parties from your tax liability.

The tax office limited the amount to 825 € per year for individuals and 1,650 € for partners filing tax returns jointly.

Childcare expenses

You can deduct 2/3 of the childcare expenses per year per child as special expenses. However, the tax office limited the amount you can deduct to €4,000 per child.

The child must be part of the taxpayer’s household and below the age of 14.

Parents of children with disabilities

Parents of children with disabilities can deduct childcare expenses even if the child is older than 14.

The prerequisite is that the child cannot support themselves because of a disability that occurred before the age of 25.

Deduct extraordinary expenses to save taxes in Germany

Deduct medical expenses from your taxes.

Depending on your income, marital status, and the number of children, you can deduct the medical expenses as extraordinary burdens (außergewöhnliche Belastungen in German).

The tax authorities consider medical expenses only if they exceed a reasonable amount.

The most common high medical expenses include glasses, dentures, physical therapy, and acupuncture.

You can also deduct

• the hospital and medical expenses,
• expenses for drugs prescribed by a doctor,
• the prescription fee,
• and travel expenses to doctors, hospitals, and pharmacies.

Thus, keep the receipts of your medical expenses to save taxes.

Besides that, you should also consider taking supplementary health insurance. The most important one is supplementary dental insurance to cover expensive dental treatments.

You can use online services to help you file and save income tax in Germany. We find Wundertax* and SteuerGo* among the best tax software out there.

If you have a complex tax return or filing it yourself makes you nervous, you should get advice from a tax consultant. Tax consultants are not cheap in Germany. Depending on your situation, they may cost between 800€ and 1500€.

However, a good tax consultant can save you a lot of money.

You can get a free quote from the tax consultant we recommend here. The tax advisor offers services in English.

Funeral expenses

If a loved one dies and you pay for the funeral expenses, you can deduct those expenses. However, the costs must exceed the inheritance.

People also get funeral insurance to cover the funeral costs.

Cost of supporting a relative in need

You can deduct up to 11,784 € (for the 2024 tax year) to support the people in need.

For example, supporting

• a destitute child for whom there is no child benefit (anymore),
• a relative, or your parents in need of care.

You can also claim contributions to basic health insurance and statutory long-term care insurance for the supported person if you pay them.

The tax office considers the recipients’ income, especially if the income is more than 624€. In this case, the tax-deductible amount decreases.

You enter the support expenses in the Extraordinary Expenses attachment (Anlage Außergewöhnliche Belastungen in German).

Cost of civil proceedings

Since 2013, you can no longer deduct the costs of civil proceedings. This includes divorces.

One exception is if you have to conduct a legal dispute to safeguard your economic livelihood. In this situation, you can deduct all the legal and court expenses you spent to secure your vital income.

Learn more about legal and court expenses in our guide on legal costs in Germany. Legal insurance is one of the important insurances everyone in Germany should have.

In our comparison and test, we found that Arag*—Aktiv-Premium, WGV—Optimal PBV, and KS-Auxilia*—Jurprivat are the best legal insurance plans.

Unfortunately, no legal insurance provider in Germany offers services in English. Insurance agents like Feather* and Getsafe* offer basic English support. However, when you need legal advice, you must contact the insurance company, which only offers advice in German.

Feather and Getsafe sell Roland’s legal insurance plans.

NOTE: Top rating agencies in Germany rated Arag—Aktiv-Premium, WGV—Optimal PBV, and KS / Auxilia—Jurprivat as the best legal insurance plans in Germany (as of Jan 2025).

Deduct income from volunteer work and save taxes

For volunteer work, you can accept

• Trainer flat rate (Übungsleiterpauschale in German) – up to 3000 € per year tax-free for volunteering as a trainer.
• Volunteering flat rate/allowance (Ehrenamtsfreibetrag in German) – up to 840 € a year tax-free for volunteering in a non-profit organization.

You must enter the income from a part-time job or volunteering in Appendix N or Appendix S.

You can save taxes by using both flat rates. But not for the same activity. Thus, you can enjoy tax benefits from both; the “trainer flat rate” and “volunteering allowance” if you hold multiple posts, remunerated separately.

For example, if you work as a trainer for a sports club and also look after the club’s treasury.

NOTE: Appendix N applies if an association employs you. However, you must submit Annex S if you are self-employed.

Deduct the loss from the sale of an investment to save taxes

There are special rules for compensating for losses from an investment.

Here are a few points to consider

• If your expenses exceed your income in a year, you can carry the loss back to the previous year or forward to the following years.
• If you sell an investment at a loss, you can never offset this against other income, such as wages, pensions, or rentals.
• If you sell shares at a loss, this can only be offset against a profit from share transactions.
• If you sell investments (apart from stocks and futures) at a loss, you can offset this against other investment income – including a profit from the sale of stocks.

You can learn more about capital gain taxes in Germany here.

References

• https://www.brutto-netto.de/wissen/steuern/altersvorsorgeaufwendungen/
• https://www.finanztip.de/steuererklaerung/