Calculating the tax allowance – this is how it works

Calculating the applicable tax allowance is a complex matter. It is updated regularly and does not apply to everyone in the same way. You can read here how to calculate your own tax-free amount.

Calculate tax-free amount

Tax-free allowances determine the amount up to which an amount remains untaxed. Any sum above the tax-free allowance is taken into account by the tax. This is how tax allowances reduce the annual income tax.

• The basic tax-free amount applies to employees as well as to trainees, pensioners, students and the self-employed.
• From 2023, the basic tax allowance will be 10,908 euros.
• However, the tax-free amounts are adjusted to the different tax brackets. Depending on whether you are married, have children or are partnerless, you get different tax-free allowances.
• The information on gross wages includes the amount and the pension benefits included in it. Pension, health and long-term care insurance payments are reported together with the costs to be deducted according to the individual situation in the pay period.
• In addition, you only need to enter a little information. You only need to enter the year of birth, the tax bracket, the number of child allowances and whether church tax is paid.