SteuerGo FAQs

(2023) Which allowances can pensioners use?

Pensioners who submit an income tax return can enter various allowances and incurred costs to reduce their taxable income.

Personal pension allowance
The pension allowance is determined in the second full year of receiving the pension. In the year the pension begins and in the second year, the pension is taxed at the so-called taxable rate. The remaining amount in the second year is the personal pension allowance, which remains tax-free for life. From the third year, the pension is fully taxable after deducting the personal pension allowance and the standard allowance for income-related expenses of 102 Euro.

Allowance for civil servants and company pensioners
Like the pension allowance, the allowance for civil servants and company pensioners is gradually reduced to zero percent. This allowance only applies to pensions and company pensions from direct commitments and support funds. In addition, pensioners receive a supplement to the allowance, which also decreases over time.

Note: Due to amended laws, from 2023 the allowance for civil servants and company pensioners will be reduced more slowly than initially planned. Starting with the 2023 pensioner cohort, the applicable percentage will be reduced annually by 0.4 percentage points instead of 0.8. The maximum amount will decrease annually by 30 Euro instead of 60 Euro, and the supplement to the allowance by 9 Euro instead of 18 Euro. From 2058, the pension income will be fully taxable (§ 19 Abs. 2 Satz 3 EStG, amended by the "Growth Opportunities Act").

Here are the figures for pension start in 2023:

For retirement in 2023, the allowance is 14.0% of the pension income, up to a maximum of 1,050 Euro, and the supplement to the allowance is 315 Euro.

Including the standard allowance for income-related expenses of 102 Euro, the income is tax-free up to 1,467 Euro – for life.

Old-age relief amount
The old-age relief amount can be used by pensioners who earn additional or wage income alongside their pension. Additional income includes, for example, income from rental, capital assets, self-employment, private sales transactions or Riester pensions. However, the tax office first deducts various amounts (saver's allowance, income-related expenses). The amount of the old-age relief depends on the pensioner's year of birth.

Note: Due to amended laws, the old-age relief amount will be reduced more slowly from 2023 than previously planned. Starting with the 2023 pensioner cohort, the applicable percentage will be reduced annually by 0.4 percentage points instead of 0.8. The maximum amount will decrease annually by 19 Euro instead of 38 Euro (§ 24a Satz 5 EStG, amended by the "Growth Opportunities Act").

If you turned 64 in 2022 (born between 2.1.1958 and 1.1.1959), you will receive an old-age relief amount of 14.4% of your income, up to a maximum of 684 Euro, for life from 2023.

If you turn 64 in 2023 (born between 2.1.1959 and 1.1.1960), the old-age relief amount will be 14.0%, up to a maximum of 646 Euro, for life from 2023.

Standard allowance for income-related expenses
For the pension, every taxpayer receives a standard allowance for income-related expenses of 102 Euro per year.

Special expenses
Contributions to statutory health and long-term care insurance can also be entered as special expenses in the "Anlage Vorsorgeaufwand" by pensioners. Pensioners receive a health insurance subsidy from their pension insurance provider, which must be deducted from the contributions. Donations can be deducted as special expenses for tax purposes. The collected donation receipts thus reduce the taxable income. If you do not donate or have no other special expenses, the tax office deducts a flat rate of 36 Euro.

Extraordinary burdens
Especially for older and sick people, extraordinary burdens can arise that reduce taxable income. This could be the cost of nursing home accommodation, employing a household help, or hiring a tradesperson. But also medical expenses, such as medication, glasses or dental prostheses, can be claimed by pensioners.

Mini job
If a pensioner (over 65 years) takes on a mini job, this income is tax-free for them.

If, as a pensioner, you remain below the basic tax allowance of 10,908 Euro (2023) with the various allowances, flat rates and deductible costs, you do not have to pay any tax on your income. For married couples, the amount is doubled.