Employee savings allowance: income limit increases
Getting a little extra from the state to build up your assets? This is possible for low-income earners - with the so-called employee savings allowance. From next year, more people will be able to benefit from this than before.
Up to 122 euros per year: this is the maximum amount the state will pay savers with comparatively low incomes towards their savings products. The prerequisite is that the money flows into a product for capital-forming benefits or a building society savings contract. What's new is that more people can now benefit from the allowance. This is because the earnings thresholds will be raised in 2024.
Previously, single taxpayers were not allowed to receive more than 17,900 euros in taxable income per year in order to receive a subsidy for their home savings contract. For other valid savings products, the limit was 20,000 euros.
In 2024, the limit for both will be raised to 40,000 euros. For married couples, the income limit will double accordingly to 80,000 euros. This means that significantly more people will be able to benefit from the allowance.
Application with tax return
The savings allowance must be applied for with the income tax return and will be determined by the responsible tax office if approved. The application must be submitted "at the latest after four years of investment and the capital-forming benefits must be certified by the investment institution", explains Daniela Karbe-Geßler from the Taxpayers' Association.
However, the allowance is not paid out directly, even if it is approved by the tax office. Instead, the amounts granted are accumulated and only paid out in one go once the relevant conditions for the savings products have been met - such as the vesting and repayment periods, according to the Taxpayers' Association.
Sample calculation provides clarity
And how much support is actually available? The state adds 20 percent of the capital-forming benefits invested, provided they do not exceed 400 euros per year. There is a 9 percent subsidy for investments in a home loan and savings contract, provided the annual investment sum does not exceed 470 euros.
So if you invest the maximum amount permitted in both forms of investment, you will receive a maximum allowance of 80 euros per year for your capital-forming benefits (20 percent of 400 euros). There is a further annual allowance of around 42 euros for the building society savings contract (9 percent of 470 euros). This means that you can receive a maximum annual savings allowance of 122 euros.
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- Individuals with lower incomes can receive additional funds from the government to contribute towards insurance products or building savings accounts, known as the employer savings allowance.
- Currently, single taxpayers earning less than 17,900 euros annually are eligible for the allowance for home savings contracts, and those with incomes below 20,000 euros can claim it for other savings products.
- In 2024, both limits will be increased to 40,000 euros for individuals and 80,000 euros for married couples, making it simpler for more employees to take advantage of the allowance.
- Consumers wishing to claim the allowance should include it in their annual tax return and submit it to the respective tax office for approval.
- Approved applicants receive a percentage of their capital-forming benefits, with the maximum annual payout being 122 euros, which can be used for either investing in a home loan and savings contract or capital-forming benefits products.
- If you max out the investment amounts in both savings options, you can receive a maximum of 80 euros annually for capital-forming benefits and around 42 euros for the building society savings contract.
- The Taxpayers' Association and Consumer Centers recommend consulting with an advisor to better understand the requirements and potential benefits of the employer savings allowance.
Source: www.ntv.de
