With the personal allowance you reduce your income tax and in the end you do not pay less tax, but you receive more net salary each month.
If you have allowances added to your tax card (elstam), an even larger portion of your gross wages will remain tax-free. You can get allowances for expenses that you would otherwise report on your tax return, such as job expenses, second home, another child, medical expenses. Most allowances are not recognized until a 600 euro limit is reached.
To apply for the wage tax allowance in 2021, you must apply to the tax office no later than 30.November submit an "application for income tax reduction".
If you have claimed an allowance, you are obliged to file a tax return. Except, you have a gross wage up to 10.700 euro if single / up to 20.200 euros for married couples, or you have applied for the disability allowance or the survivor allowance
Why apply for income tax allowance?
As an employee, you can convert your anticipated income-related expenses, special expenses or extraordinary expenses into a personal 2018 wage tax allowance and thus reduce your wage tax. In the end, you will not pay less taxes, but you will have more net salary in your pocket each month and avoid a free loan to the treasury in the form of overpaid payroll taxes.
Wage tax is deducted according to flat-rate allowances that are incorporated into the wage tax brackets, without taking into account the specific situation of the employee. Thus the state collects in most cases more than it is entitled to.
Do I have to report the new income tax allowance to my employer?
No, your employer will receive their registered allowance automatically via the electronic wage tax card and will take it into account in your salary statement.
How can I find out my wage tax allowance?
Your income tax reduction is stored with all other personal tax deduction characteristics in the elstam database of the tax office. From here, the tax characteristics are retrieved by the employer for payroll accounting.
- You can read your personal allowance most easily on your payslip, as your chef is obliged to show the elstam data here.
- You can ask the tax office, or
- Look up your tax data yourself in the elster online portal. For this, however, in addition to your tax ID / tax number, you also need an electronic certificate, which you must apply for in advance.
Apply for tax allowance
When should I apply for the income tax allowance?
You can apply for the wage tax allowance 2021 until 30. Apply for november. The allowances are entered in the elstam database.
Tip: the right time to apply for wage tax allowance
- Increase maternity pay or sick pay: an allowance can increase maternity pay if you apply for the allowance no later than 3 months before the start of maternity leave you can increase your sick pay if you apply for an allowance no later than one month before the start of incapacity for work.
- Reduce wage tax for christmas bonus: A tax allowance always becomes effective on the next first of the month. Who applies in november, the entire annual allowance will be taken into account in the payroll in december. This allows you to keep the wage tax low for the christmas bonus paid out in december.
For how long is an income tax allowance valid?
You can apply for an allowance at the tax office for two years.
How to apply for the income tax allowance?
To do this, fill out the "application for wage tax reduction.
In some cases, the tax office requires proof that the requested expenses will actually occur in the future. Commuting to work or, for example, study costs of the children can be easily proven. In cases that cannot be proven, such as a planned purchase of expensive work equipment, you must credibly explain to the tax office which investments you are planning to make.
Application for wage tax reduction – forms download
Fill in the "application for income tax reduction" and the corresponding annex for income-related expenses, special expenses/extraordinary burdens and children.
As of 2018, the previous forms "application for wage tax reduction" and "simplified application for wage tax reduction" have been merged into one form. There are three attachments that should be filled out as needed:
Calculate tax allowance
Prerequisite for the recognition of an income tax allowance is that your expenses exceed the 600 euro limit.
The 600 € limit does not apply to all expenses, household-related services such as craftsmen and cleaning help are excluded.
Calculation example: how to check the 600 euro application limit
You drive 20 kilometers to your work on 220 working days and pay 1.600 EUR to your childminder.
|Travel to work: 220 days x 20 kilometers x 0,30 euro||+ 1.320 €|
|minus. Employee lump sum||– 1.000 €|
|special expenses for the childminder||+ 1.600 €|
|you can apply for a wage tax reduction, as the sum of the expenses is above the 600 euro limit.|
Example: how to calculate the wage tax allowance?
In june, you apply for a wage tax reduction. How much is your monthly tax-free amount?
|Allowance calculation for income-related expenses|
|travel to work: 220 days x 20 kilometers x 0,30 euro||+ 1.320 €|
|minus. Employee lump sum||– 1.200 €|
|sum of income-related expenses||= 120 €|
|allowance calculation for special expenses|
|childminder||+ 1.600 €|
|minus. Special expenses lump sum||– 36 €|
|total special expenses||= 1.564 €|
|calculation of total income tax allowance|
|allowance per year ( 120 € + 1.564 € )||1.684 €|
|allowance per month (july to december)||114 €|
|from july, you will be entitled to a monthly allowance of 314 euros.|
What is the income tax allowance for??
Wage tax allowance without 600 EUR application limit
These allowances can be entered in the income tax card without restrictions (without reaching a 600 euro limit):
- Craft services in the household: for craftsman's wages, travel and machine costs (no material costs): up to 4.800 euros
- Domestic help as 450 euro job: up to 2.040 euro
- Home help self-employed or employed: up to 16.000 euros
- Lump sum for surviving dependents: 370 EUR
- Disability allowance: depending on the degree of disability 310 – 3.700 euros
- Losses carried forward: single person up to 1 million euros / spouse up to 2 million euros
Income tax allowance for expenses of 600 euros or more
The following allowances are only recognized when a 600 euro limit is reached. So only if the sum of your income-related expenses from non-independent work, special expenses and extraordinary burdens of a general nature is more than 600.00 euros. You must pay z.B. 1.600 euro income-related expenses (employee lump sum of 1.200 euro plus 600 euro application limit) must be presented in order for the allowance for income-related expenses to be taken into account.
Wage tax allowance 2022 for income-related expenses
(after deduction of the lump sum for income-related expenses of 1.200 euro and the application limit of 600 euro)
- Travel costs to work (distance allowance): for each kilometer of single distance to work 0.30 euros / from the 21. Kilometer 0,38 euro, maximum 4.500 euros per year. Costs for public transportation with receipt.
- Travel expenses: only travel expenses not reimbursed tax-free by the employer. For each kilometer driven by car 0.30 euros, by motorcycle 0.20 euros or costs for public transportation.
- Work equipment: professional clothing, tools, technical literature, home office equipment, etc. If the net acquisition costs exceed 800 EUR, the work equipment must be distributed over the period of use.
- Study: A study that is located outside of the home or in the center of your entire professional activity can be deducted without limitation. Otherwise, a limit of up to 1.250 EUR per year.
- Double housekeeping: travel between the second home and the place of work and travel expenses for one family trip home per week (distance allowance), meal allowance for the first three months for each day at the place of work – 28 EUR/day, days of home and return trips – 14 EUR/day. Costs for garage.
- Continuing education expenses for students, training: continuing professional education: secondary education/studies, doctorate for the attainment of the ph. Expenses for technical literature, learning materials, examination fees..
- Relocation: flat rate for job-related relocation in 2022: the flat rate for relocation expenses will increase on 1. April 2022 for singles from 870 to 886 euros.
Wage tax allowance 2022 for special expenses
(after deduction of 36 euros for single persons / 72 euros for married couples)
- Alimony for ex-partner: alimony lines after divorce / separation to ex-partner up to 13.805 EUR per year
- Training costs – students, trainees: first vocational training and first degree up to 6.000 EUR per year
- Church tax: paid church tax (but not church tax on final withholding tax).
- Childcare costs: up to 2/3 of the costs, maximum 4.000 a year for kindergarten, childminder, etc., you can deduct these expenses. For children up to 14 years of age living in the household or handicapped persons without age limit, if they were born before the 25. Were disabled before the age of 18.
- Donations to political parties: single persons up to 1.650 euros / spouse 3.300 euros
- Donations for charitable, benevolent and ecclesiastical purposes: up to 20 percent of total income.
- School fees for private school: up to 5.000 euros per year, for each child 30 percent of the school fees.
Tip: tax tip for students
You cannot deduct the costs of your first professional training or studies as income-related expenses, but you can deduct them up to the amount of 6.000 euro to be claimed as special expenses. If they do not generate any income in the same year, they will be left empty-handed. Tip: you should always try to claim your expenses as professional expenses anyway! If you do not earn any income during your initial studies, still claim the costs of the initial education as income-related expenses in an unlimited amount. They can lead to losses recognized for tax purposes as "anticipated income-related expenses", which you can have carried over to subsequent years.