Potential payroll tax reduction in 2025 becomes a viable prospect.
If you're expecting big expenses, a lengthy commute, or other situations that might lower your tax obligation in the upcoming year, you don't need to wait till the end of the year to enjoy the relief.
If you're certain that your tax-related expenses will exceed certain thresholds, you can request an advance tax deduction from the tax office. You can submit this application to your tax office right away, as reported by the Federal Association of Taxpayers.
The perks: If your application is approved, your employer will hold less income tax from your salary every month, putting more money in your pocket. This allowance can be claimed for up to two years. If your circumstances change within this period, thereby requiring a reduction in the allowance, for instance, due to a shorter commute after a job change, you must inform the tax office about the change, according to the Federal Association of Taxpayers.
Tax return is compulsory if approved
The condition for approving your application is that the tax-related expenses you estimate for 2025 will exceed 600 euros - this includes special expenses for alimony or extraordinary medical costs. If your only business-related expenses are promotional costs like travel or training costs, the tax office will only grant the deduction if the amount exceeds 1,230 euros. The reason: up to this sum, the employee's allowance already applies, irrespective of an application.
If the tax office grants you an advance tax deduction, you are required to file a tax return for that specific year. Only this way can the tax office verify whether your predictions were accurate or if you might have paid less tax than required.
To qualify for the advance tax deduction, you need to estimate that your tax-related expenses for 2025 will exceed 600 euros or 1,230 euros for promotional costs. If approved, you'll need to submit a tax declaration for that year to allow the tax office to verify your predictions and ensure you've paid the correct amount of tax.
