What is the Tax Allowance Amount in 2023?

The beginning of the year is a time when many changes come into effect. This is no different in tax law, which, due to regulations changing from year to year, evokes many anxious feelings among taxpayers. An example of such changes is the tax allowance, which is very popular with a large group of people throughout the country. What is this tax relief? How high is the tax allowance in 2023, and how high was it in previous years? We discuss the key topics in today’s article – we invite you to read it.

On your marks, get set, go, so how high is the tax allowance?

The tax allowance is nothing other than the amount of your annual tax-free income. In other words, if the money you earn over the year does not exceed the pre-set amount, you are not obligated to pay tax to the tax office. However, the easiest way to illustrate tax allowances is through a concrete example.

Example

Mr. Müller’s total income amounted to 10,908 €. The tax-free amount for singles in 2023 was €9,744 – in this case, Mr. Müller is exempt from tax on the earned income.

Annual tax allowance – basic allowance

The tax-free income is counted towards the so-called basic allowance. This is a type of relief that every taxpayer can claim – as long as their income is not too high. The annual tax allowance is set in accordance with social law and was established to secure a minimum subsistence level for every taxpayer. The tax allowance is set in tax tables, which change every year, as you will learn in the following sections.

It is important that the basic allowance is determined automatically – you do not need to do anything to receive it (provided your income does not exceed the set limit of the allowance).

Tax allowance 2023 – different from previous years

What is the tax allowance in 2023? This is one of the most common questions taxpayers ask. As we have already mentioned, it changes every year. Fortunately, it has an upward trend (as in previous years), which means it gets higher every year, allowing more taxpayers not to worry about paying taxes to the tax office. What is the tax allowance in 2023? We have compiled this information in the table below. For comparison, we have also provided the figures applicable in previous years.

As you can see, the allowance in 2023 is much higher than a few years ago (it increased by over 1,000 € in five years). Even compared to 2020, there was a significant jump (over 300 €). However, this is not the end of the good news – the tax allowance for 2024 will also change and will be 11,604 € for singles.

Basic allowance 2023, i.e., for whom does the tax-free income apply?

“Tax allowance for pensioners,” “Tax allowance for students” – these are examples of questions frequently entered into search engines. No wonder – the tax system works in such a way that the obligation to pay taxes actually reaches everyone who earns an income. So who can expect a tax exemption (provided the income level is sufficiently low)? The basic allowance applies to all taxpayers, i.e.:

• Employees,
• Self-employed,
• Trainees,
• Pensioners,

Annual tax allowance 2023 – what if I exceed the tax allowance?

As mentioned, the basic allowance is understood as a tax allowance. As long as your income is within the set threshold, you do not have to pay taxes. What if the income is higher? This means you need to file a tax return and settle with the tax office. However, one should know that employees often have more tax deducted from their wages than is necessary. In this case, it is worthwhile to create a statement, thanks to which you can expect a tax refund .

Need help? With Taxando, you can create your tax return easily and securely – check out our offer.