Deducting insurance from tax

INDEX

• Which insurance contributions can I deduct from tax?

• Income-related expenses (Werbungskosten) or special expenses (Sonderausgaben)?

• Insurance against professional risks are income-related expenses

• Insurance against private risks are special expenses

• Maximum amount of deductible insurance premiums

• Maximum amount for retirement provision

• Maximum amount for Riester plans

• Maximum amount for other provident expenses

• You should keep proof for the tax offic

• The easiest solution: wundertax

Which insurance contributions can I deduct from tax?

Taxpayers can declare their insurance premiums in their tax return and save a lot of money. This is because many insurance policies are tax-privileged. This applies to insurance policies that are used for personal provision (healthcare or income protection) or are taken out due to professional risks. On the other hand, you cannot deduct pure property insurance from your tax bill, as this is neither a precautionary measure nor necessary for training or a profession.

Insurances for health care & income protection are tax-deductible

• health and long-term care insurance (Kranken- und Pflegeversicherung)
• liability insurance (Haftpflichtversicherung)
• casualty insurance (Unfallversicherung)
• occupational disability insurance (Berufshaftpflichtversicherung)
• pension insurance (Rentenversicherung)

Insurance for occupation & training are also tax-deductible

• employment legal protection (Arbeitsrechtsschutz)
• professional liability (Berufshaftpflichtversicherung)
• civil servant’s liability insurance (Diensthaftpflichtversicherung)

You can NOT deduct property insurances from your taxes

• Household contents insurance (Hausratversicherung)
• Car insurance (Kfz-Kaskoversicherung)
• Building insurance (Gebäudeversicherung)
• Bicycle insurance (Fahrradversicherung)
• Luggage insurance (Gepäckversicherung)
• Travel cancellation insurance (Reiserücktrittsversicherung)

Provident expenses

👍 You can deduct contributions to healthcare and income protection from tax as special expenses (Sonderausgaben).

Occupation & training

👍 You can claim contributions for professional insurance policies as income-related expenses (Werbungskosten) for tax purposes.

Income-related expenses (Werbungskosten) or special expenses (Sonderausgaben)?

There are insurance policies that cover professional risks and insurance policies that cover private risks. Professional insurance policies are tax-deductible as income-related expenses (Werbungskosten) or as business expenses (Betriebsausgaben) for self-employed persons. Insurance policies for private risks (old-age provision, healthcare and income protection, etc.) are tax-deductible as special expenses (Sonderausgaben).

Insurance against professional risks are income-related expenses

You can deduct the following insurance policies in full as income-related expenses:

• Professional liability insurance (Berufshaftpflichtversicherung)
• Casualty insurance (Unfallversicherung, for work-related accidents)
• Legal expenses insurance (Rechtsschutzversicherung, the portion for labor law disputes)
• Fees for insurance consultants
• Insurance for equipment used solely for professional purposes (for example, insurance for your camera if you are a photographer or cameraman)

You enter the expenses for professional insurances in tax form Anlage N.

Insurance against private risks are special expenses

These insurances are provident expenses which you can deduct as special expenses (Sonderausgaben):

• Statutory pension insurance (gesetzliche Rentenversicherung)
• Health and long-term care insurance (Kranken- und Pflegeversicherung)
• Unemployment insurance (Arbeitslosenversicherung)
• Private pension provision, for example Riester Plans
• Occupational disability insurance (Berufsunfähigkeitsversicherung)
• Motor vehicle liability insurance (Kfz-Haftpflichtversicherung)
• Liability insurance (Haftpflichtversicherung)
• Pet owner liability insurance (Tierhalter-Haftpflichtversicherung)
• Term life insurance (Risiko-Lebensversicherung)
• Travel health insurance (Reisekrankenversicherung)
• Contributions to the artists' social security fund for artistic professions (Künstlersozialkasse)
• Contributions to professional pension schemes (berufsständische Versorgung) that provide similar benefits to statutory pension insurance (for example, doctors, pharmacists and lawyers have such schemes)

The legal situation for private pension insurance (private Rentenversicherung) changed in 2005. Insurance policies that were taken out before 2005 and have a contract term of at least 12 years can be deducted as special expenses.

Please note: Some insurance policies cover private AND professional risks at the same time, for example legal protection insurance. Legal protection at work is often included as part of the insurance. The premiums are allocated accordingly to income-related expenses and special expenses in the tax return. In the case of casualty insurance against professional and private risks, half of the insurance premium can be claimed as income-related expenses. Your insurance company can certify what proportion of the insurance premium is attributable to professional and private risks. You should keep this certificate in case the tax office (Finanzamt) asks for it.

Maximum amounts of deductible insurance premiums

Insurance premiums are sometimes only taken into account up to a certain maximum amount. Unfortunately, you have to bear the costs that exceed this limit yourself.

Maximum amount for retirement provision

For retirement provision, i.e. contributions to statutory pension insurance, Rürup pensions, occupational pension schemes or the agricultural pension fund (landwirtschaftliche Alterskasse), the tax office will take 100% of your expenses into account from the 2023 tax year. A maximum amount applies, which changes annually. For 2024, the maximum amount of deductible pension expenses is 27,566 euros (for individual assessment) or 55,132 euros (for joint assessments).

Maximum amount for Riester plans

Riester plans also serve to provide for old age. They have a separate maximum amount of 2,100 euros. Your contributions to the Riester pension and the Zulage (state allowance) are added together and taken into account for tax purposes as special expenses (Sonderausgaben). You enter contributions to the Riester pension in Anlage AV.

Maximum amount for other provident expenses

You can also declare expenses for other provident expenses (sonstige Vorsorgeaufwendungen) in your tax return. These include, for example, unemployment insurance, health and long-term care insurance, liability insurance or occupational disability insurance. In principle, employees can deduct up to 1,900 euros in other pension expenses. Self-employed persons can claim up to 2,800 euros. As a rule, employees already exhaust these maximum amounts with their contributions for health and long-term care insurance.

You enter other pension expenses in the tax form Anlage Vorsorgeaufwand.

Exception: For example, if you are not employed all year round, you may not be able to use up the maximum deductible amount. You can then claim other insurance policies for tax purposes, for example contributions to unemployment insurance, liability insurance, occupational disability insurance or supplementary dental insurance.

Note: The basic contributions to health and long-term care insurance are tax-deductible in full - i.e. even if the expenses exceed the maximum amount of 1,900 euros or 2,800 euros. The basic contributions do not include the entitlement to sickness benefit (Krankengeld). Therefore, your contributions to health and long-term care insurance are reduced by 4 percent across the board. These 4 percent are not tax-deductible.

You should keep proof for the tax office

In principle, you must be able to prove your insurance expenses if the tax office requests receipts. Of course, you do not have to provide proof of the insurance contributions that are already entered in your annual payslip (contributions to health and long-term care insurance, unemployment insurance and statutory pension insurance).

The easiest solution: wundertax

Filing a tax return can be very easy - for example with wundertax. You can declare insurance costs just as easily as other costs. wundertax automatically transfers the costs to the official tax forms. So you don’t have to worry about how the insurances are classified and which tax forms you need. We take care of this for you!

• You enter occupation-related insurance under Item 3: Expenses.
• You enter contributions to health and long-term care insurance under Item 7: Additional Costs.
• You enter all other insurances under Item 7: Other Insurance Costs.