How to determine the taxable income?
How is taxable income calculated?
Taxable income is determined according to a fixed scheme. The first step is to calculate and add together the income from the seven types of income:
- Income from agriculture and forestry: Operating income minus operating expenses.
- Income from business operations: Operating income minus operating expenses.
- Income from self-employment: Operating income minus operating expenses.
- Income from employment: Income minus income-related expenses (at least the employee allowance). For pension payments, the pension allowance and the supplement to the pension allowance are also deducted.
- Income from capital assets: Income minus income-related expenses (at least the income-related expenses allowance) and saver’s allowance. If capital gains are included in the assessment, a deduction for foreign withholding tax is also possible.
- Income from renting and leasing: Income minus income-related expenses.
- Other income: Income minus income-related expenses (at least the income-related expenses allowance).
Scheme for calculating taxable income:
| Operator |
Calculation step |
| |
Total income from the types of income |
| ./. |
Old-age relief amount |
| ./. |
Relief amount for single parents |
| ./. |
Allowance for farmers and foresters |
| Result: Total income |
| ./. |
Loss deduction (loss carryforward from the previous year) |
| ./. |
Special expenses |
| ./. |
Extraordinary burdens |
| + |
Reimbursement surplus for health insurance or church tax (§ 10 para. 4b EStG) |
| Result: Income |
| ./. |
Allowances for children |
| ./. |
Hardship allowance |
| Result: Taxable income |
