The question of what the maximum pension in Germany can be without paying taxes is of great importance to many people. Various factors play a role in this regard.
Related topic: The retirement age in Germany is increasing: who is affected
There are differences between single individuals and married couples. All these nuances need to be taken into account.
This is the potential maximum tax-free pension amount in Germany
Single retirees only need to pay tax on their pension if it exceeds the annual basic allowance of 10,908 euros.
In 2024, this amount will increase to 11,784 euros.
The basic allowance ensures that pensions up to this amount are tax-free. However, if the pension exceeds this amount, the excess is subject to taxation. It is important to note that only the portion that exceeds the tax-free amount is taxed.
For married couples or registered civil partnerships, a double basic allowance is applied. This means the initial amount needs to be multiplied by two, resulting in 21,816 euros (for 2024 – 23,568 euros).
This means that married couples receive a higher pension together without being subject to taxes. Here, too, only the portion that exceeds the tax-free amount by two times is subject to taxation. Therefore, as a married couple, it is advisable to check your joint pension income.
If necessary, tax optimization can be carried out to minimize the financial burden.
To determine which part of the pension is subject to taxation, you can use the pension allowance. It is set in the first year of receiving the pension and remains unchanged in subsequent years. In 2023, the pension allowance will be 17% of the gross pension.
In 2024, the pension allowance will decrease to 16%. The pension allowance decreases each year after retirement. From 2040 onwards, there will be no more pension allowances. Due to this, the entire old-age pension will be taxed at a rate of 100%.
To avoid financial surprises, it is important to know your tax obligations when retiring. One way to minimize the tax burden is to invest in various tax-deferred products or take advantage of tax incentives.
It is advisable to seek tax advice well before retiring. This will help determine a course for a worry-free retirement from a financial perspective.
Related topics:
In consideration of the retirement age increase in Germany, understanding the tax implications of retirement is crucial. For single retirees, their pension exceeding the annual basic allowance of 10,908 euros (which will increase to 11,784 euros in 2024) will be subject to taxation. On the other hand, married couples or registered civil partnerships benefit from a doubled basic allowance, currently 21,816 euros (increasing to 23,568 euros in 2024), ensuring no taxes on their pension up to this amount. Optimizing taxes can help minimize financial burden for retirees.
