Flat Rates and Allowances in Germany – The Most Important Information

If you decide to use various tax exemptions or flat rates, you can save significant tax amounts with little effort. In today’s article, we introduce you to the most important flat rates and allowances applicable in Germany, explain how they make your annual tax return easier, and how you can obtain them.

Tax allowances in Germany – what are they?

The German tax allowances are amounts available for certain non-taxed income or expenses. Only the portion that exceeds the allowance is taxed. It is important to know that the allowance is not identical to the exemption limit – if you exceed it, the entire amount is taxed.

In addition to the classic allowances, there are other ways to save taxes. One of these is household-related services, which can be used on various occasions. For example, certain services can be deducted for tax purposes during a wedding celebration at home. Detailed information on which wedding costs are deductiblehelps in optimal tax planning for the big event.

How high were the selected tax reliefs for 2025?

• Basic allowance – €12,096.
  ● Child allowance (per couple) – €9,600.
  ● Single parent allowance – €4,260 (+ €240 for each additional child).
  ● Training allowance – €1,200.
  ● Volunteer allowance – €840.
  ● Pension exemption and old-age provisions – various.

The annual basic allowance represents the portion of income that is not taxed. So if you earned less than €12,096 in the aforementioned year, you do not have to pay income tax. Important: For married couples, the amounts are doubled.

Child allowance vs. child benefit – tax differences

With the so-called child allowance, the German state tries to provide tax relief to families with children. The allowance consists of two parts: the amount for the material subsistence level of your child and the amount for care, education, or training needs. However, the child allowance does not automatically reduce taxes – the tax office reviews under the so-called favorable assessment whether child benefit or the child allowance is more financially advantageous for you. The allowance is only considered in your tax return if the tax benefit from the allowance is greater than the child benefit already paid.

In addition to these tax reliefs, families can also benefit in certain years from the child bonus – a one-time payment that is given as direct financial support and does not need to be offset against the child allowance.

For single parents, there is also the so-called relief amount. This is €4,260 per year – plus €240 for each additional child – and is intended to offset the special financial burden of single parents. You do not need to apply for this amount separately if you are classified in tax class II. In this case, it is automatically taken into account in your tax return. Otherwise, you can actively claim it by stating it in your tax return.

Flat rates for withdrawals in kind

If you are engaged as a coach, trainer, or supervisor, you can claim the trainer allowance of €3,000 for the year 2024. For other voluntary activities, the volunteer allowance of €840 applies. To claim this allowance, you must fill out the appropriate form in your annual tax return. Note, however, that it is not possible to use both the trainer allowance and the volunteer allowance for the same activity.

Flat rate tax returns – what is a flat rate in Germany?

A flat rate is the amount granted by the tax office in two cases:

• when the actual costs are lower than the flat rate,
  ● when you cannot (or do not want to) prove your actual costs.

An example: For income tax, each employee is automatically granted an employee lump sum of €1,000 for work-related expenses like travel expenses, work clothing, professional literature, work equipment, or training costs, based on their employment. If you have spent more money, you must be able to prove it. To receive the flat rate, you do not need to provide additional explanations in your tax return – the tax office automatically deducts it.

Flat rate taxes – what are the most popular flat rates in Germany 2025?

Here are the three most popular German flat rates – the distance allowance, the disability flat rate, and the pensioner flat rate.

Flat rate income tax vs. commuter allowance

The German commuter allowance is included in the employee lump sum. The tax office usually considers €0.30 for every kilometer driven between home and workplace, from the 21st kilometer €0.38. It is important to know that the distance allowance, regardless of the length of the distance, applies only to single journeys. To claim it, you must state your income in your tax return. What other commuter allowances can be deducted from taxes in Germany? For work in a home office, even if you do not have your own office (€6 for each day, max €1,200). This amount is automatically deducted, but only if your total work-related expenses exceed €1,000.

• Flat rates for meal allowances during a business trip as deductible expenses.
  ● For work-related relocations.

Flat rates for severe disability

The severe disability flat rate can (for the year 2025) range from a minimum amount of €384 to a maximum amount of €7,400, depending on the degree of disability. To receive them, an appropriate application must be submitted when filing the tax return. It may happen that higher costs arising due to a disability are recognized as extraordinary burdens – in this case, they must be proven and the flat rate does not apply.

Flat rate tax on pensions and annuities

For pensions, the following benefits are available:

• the retirement relief amount – for those who turn 65 before the taxation period and receive a salary or other income alongside the pension; its amount depends on the birth date and is automatically calculated by the German tax office;
  ● a flat rate for expenses related to income from pension payments of €102;
  ● a flat rate of €370 per year for survivors (widows, orphans, half-orphans) who receive certain family benefits.

Which flat rates and tax credits can be deducted in Germany?

Both the German tax allowances and the flat rates allow for simplification of tax returns – they are therefore viewed positively not only by the filers but also by the tax office in Germany. If a certain amount is not exceeded in the tax return, you do not have to pay income tax or prove your expenses to the office. Most flat rates and allowances are automatically calculated, but not in all cases. In such cases, the tax refund software Taxando helps you.