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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 (2026) 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 (2026):

DeductionAmount / RuleBasis
Commute to work (Entfernungspauschale)€0.38/km from the first kilometer (from 2026; through 2025 — €0.30 for the first 20 km and €0.38 from km 21), one way only [3]Distance from home to work
Home office (Pauschale)€6/day, maximum €1,260/year [4]Days you work mainly from home; no separate study required
Work equipment (Arbeitsmittel)Up to €800 excluding VAT (€952 including VAT) — fully in year of purchase, above that — depreciation. Computers and software — fully in year of purchase at any price [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 for miscellaneous costs plus actual costs for transport, trips and double rent [6]If move is due to job change or transfer

From 2026, union dues (Gewerkschaftsbeiträge) are fully deductible — in addition to the €1,230 flat-rate allowance [26].

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 €30,826 per year (2026) for singles, €61,652 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 (2026) [10]Combined limit together with basic health insurance contributions. If those already exceed the limit, these policies do not reduce your tax
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 (2026) depending on level
Funeral expenses (Bestattungskosten)If the estate does not cover them; Finanzamt benchmark up to €7,500 [18]Less any insurance payments received. Transporting the body from abroad can raise the recognised amount
Legal costs (Prozesskosten), including divorceNot deductible since 2013 [19]Exception: proceedings without which you risk losing your livelihood

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. The rates and caps below apply in 2026 [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 costs (wage and 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)?​

Usually not. The Bundesfinanzhof (ruling VI R 14/04 of 15 March 2007) treats German language courses, the Integrationskurs included, as private living costs: you need the language in everyday life too [27]. They are not Sonderausgaben (special expenses) either, because a language course isn't vocational training. The exception is a course for a specific job, such as professional German required by your employer: then the costs can count as Werbungskosten, with an employer letter, the Teilnahmebescheinigung (participation certificate) and invoices. If your employer paid for the course, you have nothing to deduct. In unclear cases, a Lohnsteuerhilfeverein (tax assistance association) or a Steuerberater (tax adviser) can help.

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: Anerkennungsgebühren (recognition fees), beglaubigte Übersetzung (certified translation) costs, notarization, and postage. If an Anpassungsqualifikation (adaptation course) was required for full recognition — those costs are also deductible. Keep all receipts and payment confirmations. In the Steuererklärung (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 — €6 per day, maximum €1,260 per year (210 days). On days commuting to the office, the Entfernungspauschale (commuter allowance) applies — from 2026, €0.38 per km from the first kilometer (through 2025 — €0.30 for the first 20 km and €0.38 from km 21), 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 €1,230 Werbungskostenpauschale (automatic employee deduction), making filing a Steuererklärung (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: €964 for the taxpayer plus €643 for each additional family member (in effect since March 2024, unchanged in 2026) [6]. It covers miscellaneous costs: connecting appliances, small repairs, tips. On top of it, actual costs are deductible 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. A move from abroad to Germany for work is deductible too, but its flat rate follows different rules (Auslandsumzugskostenverordnung); a Lohnsteuerhilfeverein or Steuerberater can help here. Expenses are reported in Anlage N (employment income appendix). The flat rate needs no receipts: you declare the move in the return.

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

No. The law (§ 35a Abs. 5 EStG) requires an invoice (Rechnung) and payment into the provider's account; cash rules out the Handwerkerleistungen (craftsmen services) deduction [22]. Accepted ways to pay: bank transfer (Überweisung), direct debit (Lastschrift), or card payment. Ask for a Rechnung (invoice) that separates labor costs from material costs — 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 €1,200 per year (2026).

Sources​

  1. Einkommensteuergesetz § 9a Satz 1 Nr. 1 — Arbeitnehmer-Pauschbetrag €1,230, https://www.gesetze-im-internet.de/estg/__9a.html (2026)

  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. Bundesregierung — Steueränderungsgesetz 2025: commuter allowance €0.38 from the first kilometer effective 01.01.2026, https://www.bundesregierung.de/breg-de/aktuelles/steueraenderungsgesetz-bundesrat-2383684 (2026)

  4. Einkommensteuergesetz § 4 Abs. 5 Satz 1 Nr. 6c — Homeoffice-Pauschale €6 per day, up to €1,260 per year, https://www.gesetze-im-internet.de/estg/__4.html (2026)

  5. Einkommensteuergesetz § 6 Abs. 2 (GWG up to €800 excluding VAT, since 2018); BMF letter of 22.02.2022 — useful life of computers and software 1 year, employees included, https://www.gesetze-im-internet.de/estg/__6.html , https://www.haufe.de/finance/buchfuehrung-kontierung/bmf-verkuerzung-nutzungsdauer-software-und-hardware_186_632212.html (2026)

  6. Bundesministerium der Finanzen — Steuerliche Anerkennung von Umzugskosten (BMF letter of 28.12.2023, flat rates since 01.03.2024), https://lsth.bundesfinanzministerium.de/lsth/2025/B-Anhaenge/Anhang-29/IV/IV-2/anhang-29-IV-2.html (as of 2026)

  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 (2026 limits: €30,826 / €61,652 under § 10 Abs. 3 EStG)

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

  10. Einkommensteuergesetz § 10 Abs. 4 — cap on other Vorsorgeaufwendungen €1,900 / €2,800; basic KV/PV contributions are deductible in full even above the cap, https://www.gesetze-im-internet.de/estg/__10.html (2026)

  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. Einkommensteuergesetz § 33 Abs. 3 — zumutbare Belastung 1–7% depending on income, marital status and children, https://www.gesetze-im-internet.de/estg/__33.html (2026)

  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. Einkommensteuergesetz § 33b Abs. 3 — Behinderten-Pauschbetrag €384–7,400 (rates since 2021, unchanged in 2026), https://www.gesetze-im-internet.de/estg/__33b.html (2026)

  18. Lohnsteuer kompakt — Bestattungskosten als außergewöhnliche Belastung (benchmark €7,500 since 2003; only if the estate is insufficient; transport from abroad as an exception), https://www.lohnsteuer-kompakt.de/de/texte/2025/347/bestattungskosten (2025)

  19. Einkommensteuergesetz § 33 Abs. 2 Satz 4 — legal costs not deductible unless your livelihood is at risk (since 2013), https://www.gesetze-im-internet.de/estg/__33.html (2026)

  20. Einkommensteuergesetz § 35a — 20%: up to €510 (mini-job in the household), up to €4,000 (household services), up to €1,200 (Handwerkerleistungen), https://www.gesetze-im-internet.de/estg/__35a.html (2026)

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

  22. Einkommensteuergesetz § 35a Abs. 5 Satz 3 — invoice and payment into the provider's account, https://www.gesetze-im-internet.de/estg/__35a.html (2026)

  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)

  26. Bundesministerium der Finanzen — Das ändert sich 2026 (union dues on top of the employee flat-rate allowance), https://www.bundesfinanzministerium.de/Content/DE/Standardartikel/Themen/Steuern/das-aendert-sich-2026.html (2026)

  27. Bundesfinanzhof — ruling of 15.03.2007, VI R 14/04 (German language courses as private living costs, not Werbungskosten), https://dejure.org/dienste/vernetzung/rechtsprechung?Text=VI+R+14%2F04 (2007)