Taxes on pensions: This is how pensioners keep more of their net income!

Taxes on pensions: This is how pensioners keep more of their net income!

Pension taxation in Germany has changed significantly in recent years and continues to play a central role in the discussion about retirement provision. Annual adjustments and regulations often create a complex situation for pensioners. Loud star Pensioners who will retire in 2024 can receive an annual gross pension of up to 16,243 euros tax-free. For couples, this amount doubles to 32,486 euros.

Other allowances apply, particularly for fixed pensioners who have been retired since 2005. You can receive up to 19,758 euros tax-free. This shows that the tax regulations are particularly more favorable for long-term pensioners. Interestingly, the tax allowance for new pensioners decreases every year, while at the same time the taxable portion of the pension decreases every year. In 2024, 83 percent of the gross pension had to be taxed, with full taxation now being postponed until 2058.

Taxable pension income 2025

The tax situation will change again in 2025. Loud Transparent advice The tax allowance is 12,084 euros. Anyone who receives more than this amount of pension income is required to file a tax return. A central point of the reform is the gradual taxation of pensions, which should be fully implemented by 2058. Starting this year, pensioners will have to pay taxes on 83.5 percent of their pension payments.

As in previous years, pensioners must claim their income-related expenses and certain special taxes. This includes a flat rate for business expenses of 102 euros, a flat rate for special expenses of 36 euros and a maximum of 1,739 euros for pension expenses. These deductions can help reduce taxable income, which is important for many retirees.

Tax rates and allowances

The tax rates that retirees expect in 2025 start at an initial tax rate of 14 percent and increase depending on income. From an annual income of around 68,431 euros, the top tax rate of 42 percent applies, while the rich tax rate of 45 percent applies to income over around 277,826 euros. It is important that pension taxation is only applied when the total income is above the basic allowance. In 2025 this will be 12,096 euros for single people and 24,192 euros for married people.

In addition, the church tax of 8 to 9 percent remains, while the solidarity surcharge has no longer been due for pensioners since 2021. This is particularly helpful for pensioners who remain below the basic allowance.

The question of tax liability not only applies to pensioners in Germany, but also has international implications. Retirees who live abroad for more than six months are subject to limited tax liability, which can further complicate their financial planning. In order to deal with this complexity, it is advisable to find out about your own tax situation at an early stage and, if necessary, seek tax advice.