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Tax Deductions

Tax deductions (Steuerfreibeträge and absetzbare Ausgaben) reduce your taxable base — you pay taxes not on all income, but after recognized expenses are deducted. Every employee automatically receives €1,230 per year as Werbungskostenpauschale (flat-rate work expenses allowance) [1]. If your actual expenses exceed this amount, itemize them in your Steuererklärung (tax return), and your taxable base will decrease.

Werbungskosten — Work-Related Expenses​

Werbungskosten (expenses related to earning income) — everything you spend to perform your job. Employees can deduct commuting costs, work equipment, professional development, and other work-related expenses [2].

Typical deductions for employees:

DeductionAmount / RuleBasis
Commute to work (Entfernungspauschale)€0.30/km (first 20 km), €0.38/km (from 21st km), one way only [3]Distance from home to work
Home office (Pauschale)€6/day, maximum €1,260/year [4]Days worked from home without dedicated office
Work equipment (Arbeitsmittel)Up to €800 net — fully in year of purchase, above — depreciation [5]Laptop, monitor, work furniture
Work clothes (Arbeitskleidung)Actual expensesOnly if required for work and not suitable for everyday wear
Professional development (Fortbildung)Actual expensesCourses, books, conferences directly related to current profession
Work-related move (Umzugskosten)Lump sum or actual expenses [6]If move is due to job change or transfer

Sonderausgaben — Special Expenses​

Sonderausgaben (special expenses) — insurance and social security costs not directly work-related but recognized by the state as necessary. They reduce the tax base within established limits [7].

DeductionLimitExplanation
Pension contributions (Rentenversicherung)Up to €27,566 per year (2025) for singles, €55,132 for couples [8]Including mandatory GRV and Rürup-Rente
Health and care insurance (Kranken- und Pflegeversicherung)Basic contributions fully [9]Mandatory and private basic insurance
Liability (Haftpflicht), accident insurance (Unfallversicherung)Up to €1,900 (employees) / €2,800 (self-employed) per year [10]Combined limit for all private insurance
Donations (Spenden)Up to 20% of total income [11]Only to recognized organizations
Church tax (Kirchensteuer)Fully [12]If you are a church member and pay the tax

Außergewöhnliche Belastungen — Extraordinary Expenses​

Außergewöhnliche Belastungen (extraordinary expenses) — costs that exceed ordinary expenses and are caused by extraordinary circumstances [13]. Tax deduction applies only to the portion exceeding zumutbare Belastung (reasonable burden threshold) — this threshold ranges from 1% to 7% of annual income depending on your income, marital status, and number of children [14].

Expense CategoryRecognition ConditionsSpecial Features
Medical expenses (Krankheitskosten)Expenses not covered by insurance; prescription or medical certificate required [15]Medications, glasses, dentistry, alternative medicine (with prescription)
Care for relatives (Pflegekosten)Documentary proof of care level (Pflegegrad) [16]Care services, home adaptation
Disability expenses (Behinderung)Disability level 20% or higher [17]Lump sum (Behinderten-Pauschbetrag) from €384 to €7,400/year depending on level
Funeral expenses (Bestattungskosten)Up to €10,000 if no inheritance [18]Less any insurance payments received
Divorce or legal costs (Prozesskosten)Recognized in limited cases since 2013 [19]Only existentially important matters

Handwerkerleistungen and Haushaltsnahe Dienstleistungen​

Handwerkerleistungen (craftsmen services) and Haushaltsnahe Dienstleistungen (household services at home) provide direct tax credit (Steuerermäßigung) — not from the tax base, but from the tax amount [20].

CategoryDeduction RateMaximum Deduction/YearWhat's IncludedImportant Condition
Handwerkerleistungen20% of labor costs€1,200Repairs, modernization, maintenance in house/apartment: plumber, electrician, painter, appliance installation, gardener [21]Labor cost only, no materials. Payment by transfer, not cash [22]
Haushaltsnahe Dienstleistungen20% of service costs€4,000Cleaning, window washing, childcare at home, elderly care, cooking, garden work [23]Payment by transfer. Receipt or invoice with address [24]
Minijobberin (domestic help on mini-job)20% of contributions€510Cleaning, cooking, childcare [25]Official registration through Minijob-Zentrale
Main Rule

Keep all receipts and invoices. Pay services by transfer, not cash — otherwise deduction won't apply.

FAQ​

Not legal or financial advice.

Can I deduct German language course costs (Integrationskurs)?​

Language course expenses can qualify as Werbungskosten (income-related expenses) if knowledge of German is necessary for your current job. In that case, the deduction amount is unlimited. If the course is not directly related to your current profession, the costs may be recognized as Sonderausgaben (special expenses) — capped at EUR 6,000 per year, similar to Erstausbildung (initial training). The key factor is documenting professional necessity: a letter from the employer, job requirements, or an employment contract specifying language needs. To claim the deduction, keep the Teilnahmebescheinigung (participation certificate) and payment receipts. Deductible costs include: course fees, textbooks, and transport to the course location. An Integrationskurs paid for by the employer cannot be deducted again by the employee.

I paid for credential recognition (Anerkennung) out of pocket — is this deductible?​

Yes, costs for Anerkennung (recognition of foreign qualifications) are typically deductible as Werbungskosten (income-related expenses) if the recognition is needed for your current or intended profession. Deductible costs include: Anerkennungsgebuhren (recognition fees), beglaubigte Ubersetzung (certified translation) costs, notarization, and postage. If an Anpassungsqualifikation (adaptation course) was required for full recognition — those costs are also deductible. All receipts and payment confirmations must be retained. In the Steuererklarung (tax return), these expenses are listed in Anlage N (employment income appendix) under Fortbildungskosten (professional development costs). The deduction is available even if recognition has not yet been completed at the time of filing — proof that the process has been initiated is sufficient.

Can I claim both Homeoffice-Pauschale and Entfernungspauschale?​

Yes, but not for the same day. On days working from home, the Homeoffice-Pauschale (home office flat rate) applies — EUR 6 per day, maximum EUR 1,260 per year (210 days). On days commuting to the office, the Entfernungspauschale (commuter allowance) applies — EUR 0.30 per km (first 20 km), EUR 0.38 per km (from the 21st km), one way only. Claiming both deductions for the same day is not permitted. There is no specific documentation requirement, but keeping a log of home-office versus office days helps if the Finanzamt (tax office) requests verification. For hybrid workers, the combination of these two deductions often exceeds the EUR 1,230 Werbungskostenpauschale (automatic employee deduction), making filing a Steuererklarung (tax return) financially worthwhile.

I relocated to another city for work — which moving costs are deductible?​

For work-related moves, the Umzugskostenpauschale (moving cost flat rate) is available: EUR 964 for the taxpayer plus EUR 643 for each additional family member (2025). Alternatively, actual costs can be claimed with documentation: moving company, temporary double rent (up to 6 months), trips to search for an apartment, and real estate agent fees for renting. The key condition: the move must shorten the commute by at least 30 minutes one way, or be directly caused by a job change or employer transfer. International relocation to Germany to start employment also qualifies under these rules. Expenses are reported in Anlage N (employment income appendix). If the flat rate covers your expenses, collecting individual receipts is not necessary — the flat rate is applied automatically when declared.

The plumber was paid in cash — can I still claim the Handwerkerleistungen deduction?​

No. Cash payment entirely disqualifies the Handwerkerleistungen (craftsmen services) deduction — confirmed by the Bundesfinanzhof (Federal Fiscal Court) ruling VI R 55/12. The payment must be traceable: bank transfer (Uberweisung), direct debit (Lastschrift), or card payment. A Rechnung (invoice) that separates labor costs from material costs is required — only labor costs are deductible. To claim the deduction, keep: the Rechnung showing the service address (must be your home address), payment confirmation, and the Kontoauszug (bank statement) reflecting the transfer. This rule exists to combat Schwarzarbeit (undeclared work). The maximum deduction is 20% of labor costs, capped at EUR 1,200 per year.

Sources​

  1. Bundesministerium der Finanzen — Werbungskostenpauschale für Arbeitnehmer, https://www.bundesfinanzministerium.de/Content/DE/FAQ/faq-werbungskosten.html (as of 2025)

  2. Bundesministerium der Finanzen — Werbungskosten bei den Einkünften aus nichtselbständiger Arbeit, https://www.bundesfinanzministerium.de/Content/DE/Downloads/Steuern/steuerliche-info-fuer-buerger-werbungskosten.pdf (2024)

  3. Bundesministerium der Finanzen — Entfernungspauschale, https://www.bundesfinanzministerium.de/Content/DE/FAQ/faq-entfernungspauschale.html (as of 2025, increase from 21st km effective since 2022)

  4. Bundesministerium der Finanzen — Homeoffice-Pauschale, https://www.bundesfinanzministerium.de/Content/DE/FAQ/faq-homeoffice-pauschale.html (as of 2025)

  5. Bundesministerium der Finanzen — Geringwertige Wirtschaftsgüter (GWG), https://www.bundesfinanzministerium.de/Content/DE/FAQ/faq-gwg.html (limit increased to €800 net from 2024)

  6. Bundesministerium der Finanzen — Umzugskosten, https://www.bundesfinanzministerium.de/Content/DE/Downloads/Steuern/umzugskostenpauschale.pdf (2024)

  7. Bundesministerium der Finanzen — Sonderausgaben, https://www.bundesfinanzministerium.de/Content/DE/FAQ/faq-sonderausgaben.html (2024)

  8. Bundesministerium der Finanzen — Altersvorsorgeaufwendungen, https://www.bundesfinanzministerium.de/Content/DE/FAQ/faq-altersvorsorge-steuer.html (2025 limits)

  9. Bundesministerium der Finanzen — Kranken- und Pflegeversicherung, https://www.bundesfinanzministerium.de/Content/DE/FAQ/faq-krankenversicherung-steuer.html (2024)

  10. Bundesministerium der Finanzen — Vorsorgeaufwendungen, https://www.bundesfinanzministerium.de/Content/DE/FAQ/faq-vorsorgeaufwendungen.html (2025 limits)

  11. Bundesministerium der Finanzen — Spenden und Mitgliedsbeiträge, https://www.bundesfinanzministerium.de/Content/DE/FAQ/faq-spenden.html (2024)

  12. Bundesministerium der Finanzen — Kirchensteuer, https://www.bundesfinanzministerium.de/Content/DE/FAQ/faq-kirchensteuer.html (2024)

  13. Bundesministerium der Finanzen — Außergewöhnliche Belastungen, https://www.bundesfinanzministerium.de/Content/DE/FAQ/faq-aussergewoehnliche-belastungen.html (2024)

  14. Bundesministerium der Finanzen — Zumutbare Belastung, https://www.bundesfinanzministerium.de/Content/DE/Downloads/Steuern/zumutbare-belastung-tabelle.pdf (threshold table, as of 2025)

  15. Bundesfinanzhof — Krankheitskosten als außergewöhnliche Belastungen, decision VI R 31/20 from 19.01.2023, https://www.bundesfinanzhof.de/de/entscheidungen/entscheidungen-online/detail/STRE202310115/ (requirements for proving medical necessity)

  16. Bundesministerium der Finanzen — Pflegekosten, https://www.bundesfinanzministerium.de/Content/DE/FAQ/faq-pflegekosten.html (2024)

  17. Bundesministerium der Finanzen — Behinderten-Pauschbetrag, https://www.bundesfinanzministerium.de/Content/DE/FAQ/faq-behinderten-pauschbetrag.html (rates increased from 2021)

  18. Bundesfinanzhof — Bestattungskosten, decision VI R 39/16 from 17.10.2018, https://www.bundesfinanzhof.de/de/entscheidungen/entscheidungen-online/detail/STRE201850050/ (expense recognition limit)

  19. Bundesverfassungsgericht — Prozesskosten, decision 2 BvL 6/14 from 08.07.2021, https://www.bundesverfassungsgericht.de/SharedDocs/Entscheidungen/DE/2021/07/ls20210708_2bvl000614.html (limitation on legal cost deduction)

  20. Bundesministerium der Finanzen — Steuerermäßigung für haushaltsnahe Dienstleistungen und Handwerkerleistungen, https://www.bundesfinanzministerium.de/Content/DE/FAQ/faq-haushaltsnahe-dienstleistungen.html (2024)

  21. Bundesministerium der Finanzen — Handwerkerleistungen, https://www.bundesfinanzministerium.de/Content/DE/Downloads/Steuern/handwerkerleistungen-merkblatt.pdf (2024)

  22. Bundesfinanzhof — Barzahlung ausgeschlossen, decision VI R 55/12 from 03.09.2015, https://www.bundesfinanzhof.de/de/entscheidungen/entscheidungen-online/detail/STRE201551257/ (requirement for non-cash payment)

  23. Bundesministerium der Finanzen — Haushaltsnahe Dienstleistungen, https://www.bundesfinanzministerium.de/Content/DE/Downloads/Steuern/haushaltsnahe-dienstleistungen-merkblatt.pdf (2024)

  24. Bundesfinanzhof — Nachweis haushaltsnaher Dienstleistungen, decision VI R 4/12 from 15.01.2015, https://www.bundesfinanzhof.de/de/entscheidungen/entscheidungen-online/detail/STRE201510060/ (documentation requirements)

  25. Bundesministerium der Finanzen — Minijob im Privathaushalt, https://www.bundesfinanzministerium.de/Content/DE/FAQ/faq-minijob-haushalt.html (2024)