Pensioners in Germany can look forward to this year: they will receive a 6.12 percent increase in pension from July. But at least the increase arrives completely. At tens of thousands, the government and inflation will immediately collect much of the increase.
Pensions in Germany will rise sharply in July 2022: by 5.35 percent in western Germany and by 6.12 percent in eastern Germany. The pension adjustment is thus significantly higher than announced by Federal Labor Minister Hubertus Heil (SPD) in November.
That’s 82.31 euros more.
That’s 92.18 euros more.
Tens of thousands of pensioners will be subject to tax at the same time as a result of the tax increase. While they can deduct certain expenses from their taxable income and the allowance has also increased, the tax liability remains – even if inflation eats up most of the pension increase.
However, the tax liability will be reduced this year by the simultaneous sharp increase in the tax allowance. Nevertheless, there is a trap: the tax office does not send any notification of the tax liability that has arisen, only a reminder if no declaration is submitted.
Example:
So far in the West you have received a statutory pension of 850 euros per month and have no other income. So you get 10,200 euros a year and so far are below the new tax allowance.
From July, after the pension increase of 5.35 percent, you will receive EUR 895.48 per month or EUR 10,745.70 per year.
This puts you above the new allowance. This means:
EUR 10,745.70 pension per year – EUR 10,347 tax-free allowance: EUR 398.7 taxable income.
So you have to pay tax on 398.7 euros.
Example: Our pensioner with his recent pension of 895 euros per month and is 398 euros above the allowance for the year. He retired in 2018, which means:
He has to pay taxes on 76 percent of the 398 euros.
So there are taxes on 303 euros. The personal tax rate applies.
Our PDF special edition provides answers to all questions on the subject of old-age provision – from the statutory pension to the Riester subsidy to private pension insurance. Sample invoices show the tax implications and explain the advantages and disadvantages of the individual products.
You can download the guide here for €9.99.
Our PDF special edition provides answers to all questions on the subject of old-age provision – from the statutory pension to the Riester subsidy to private pension insurance. Sample invoices show the tax implications and explain the advantages and disadvantages of the individual products.
You can download the guide here for €9.99.
Expenses that serve to acquire or secure the pension can be offset against the pension income. This applies, for example, to the costs of a pension advisor or membership in a trade union. Account management fees can also be set at up to 16 euros per year.
Pensioners pay a large part of their health and long-term care insurance contributions from taxed pension payments. They can therefore claim their insurance contributions as pension expenses. Expenses for liability insurance for yourself or for the car are also tax deductible.
In old age, many people need a wheelchair, prosthesis or hearing aid. In tax law, these items are called “aids in the narrower sense”. The costs for this can be claimed as an extraordinary tax burden. This also includes a stair lift, as long as it is prescribed by a doctor. Then purchase and installation can be deducted as extraordinary expenses.
The trip to the doctor and medically prescribed cures are tax deductible for pensioners.
A tax reduction of 20 percent is granted for the costs of household help as a so-called household-related service. Anyone who hires a craftsman or a gardener can also account for the expenses. If you have to go to a retirement or nursing home because of an illness, you can also deduct these costs from your taxes.
Anyone who remodels their apartment or house because of a disability can deduct the costs as extraordinary expenses.
Pensioners can also deduct voluntary donations. Up to 200 euros, the bank statement is sufficient as proof. For larger amounts, you need a donation receipt.
So if you have to do a tax return this year for the first time, you should start collecting receipts now, because a whole year is always taxed. You can already submit expenses from the spring in your tax return. Anyone who manages to push their income completely below the tax-free allowance no longer has to pay any taxes at all.
