With the new year, some changes in tax law also come into force: Specifically, this means that there are many tax-related benefits in 2021! Of course, we want to keep you up to date. Because if you are well informed, you can save a lot of taxes and spend your money on nice things. Here we summarize for you what will change in the tax year 2021.
If you are required to file a tax return, you must file it by 31 July of the following year or you will face a late filing surcharge (Verspätungszuschlag). Since 31.07.2022 falls on a Sunday, your tax return for tax year 2021 must be received by the tax office by 1 August 2022. If you file a tax return voluntarily, you have up to 4 years to do so. This means that in this case you have until the end of 2025 to file a tax return for 2021. The deadline for a voluntary tax return is always 31 December, 4 years after the tax year for which you file a tax return. There are good reasons for filing a voluntary tax return: According to the German Federal Statistical Office, the average tax refund for employees who voluntarily file a tax return is 1,027 euros.
When do I have to file a tax return?
If you receive wage replacement benefits (Lohnersatzleistungen) of more than 410 euros in a calendar year, you are required to file a tax return. Wage replacement benefits are e.g:
- Short-term work benefits (Kurzarbeitergeld)
- Unemployment benefit I (Arbeitslosengeld I)
- Parental allowance and maternity allowance (Elterngeld and Mutterschaftsgeld)
- Compensation for loss of earnings under the Infection Protection Act (Verdienstausfallentschädigung nach dem Infektionsschutzgesetz)
Although these benefits are tax-free, they are subject to progression proviso (Progressionsvorbehalt). This can increase your tax rate under certain circumstances. It is therefore all the more important to include as many deductible items as possible in your tax return. Our guide provides you with detailed information.
Have you earned additional income of more than 410 euros without deducting income tax? Are you married and are assessed in income tax class 3/5 or 4 with a factor? Then you are obliged to submit a tax return. You can find a list of all compulsory taxpayers here.
Short-term work (Kurzarbeit)
The regulations for short-term work were adjusted several times in 2020 to take account of the Corona crisis and will also apply for the most part in 2021. You can now receive short-term work benefits (Kurzarbeitergeld) for up to 24 months, at the longest until the end of 2021. The staggered increase in short-term work benefits - depending on the period for which you receive them - will also remain in place until the end of 2021. If your employer tops up your short-term work benefits, this remains tax-free until the end of 2021. A tax-free special Corona payment from your employer (Corona-Prämie) of up to 1,500 euros is also possible until July 2021.
Note: From 2021, any additional income earned during short-term work will again be counted towards the short-term work benefits - with the exception of mini-jobs: a 450-euro job in addition to short-term work will remain completely tax-free until the end of 2021. Good to know for mini-jobbers: This year, the minimum wage will increase twice: It will rise to 9.50 euros per hour from 1 January 2021, and to 9.60 euros per hour from 1 July 2021.
Tip: If you are married and receive short-term work benefits, it may make sense to change your tax class. In tax class 3, the lowest deductions are made during the year. For parents: Their short-term work benefits increase by 7%. This happens automatically in tax class 3 (the child allowance (Kinderfreibetrag) is entered here, not in tax class 5). Since 1 January 2020, taxpayers can change their tax class several times a year.
The home office lump sum (Home-Office-Pauschale) decided in December 2020 also applies to 2021. This allows you to deduct a lump sum of 5 euros per working day in the home office from your taxes. It can be claimed for a maximum of 120 days per year. You can claim up to 600 euros per year as income-related expenses. So make a note of your home office days this year too!
The basic tax-free allowance (Grundfreibetrag) will increase to 9,744 euros in 2021. It is automatically deducted from your income - only what you earn above this amount must be taxed.
Solidarity surcharge (Solidaritätszuschlag)
After almost 30 years, 9 out of 10 taxpayers will no longer have to pay the 5.5% solidarity surcharge: Up to an annual income of 61,717 euros, no solidarity surcharge is due anymore. The new exemption limit is followed by a so-called mitigation zone. This prevents the solidarity surcharge from being levied immediately on the full tax amount. Within the mitigation zone, the solidarity surcharge may not exceed 11.9% of the difference between the income tax and the exemption limit. Only top earners with income exceeding 96,409 euros and capital investors continue to pay the full solidarity surcharge of 5.5% of their income tax.
Commuting allowance (Entfernungspauschale)
The commuter allowance will increase from EUR 0.30 to EUR 0.35 from the 21st kilometer of one-way travel in 2021. The commuting allowance applies to each full kilometer - regardless of the means of transportation. You can also deduct it if you ride your bike to work.
Relief for families
The child allowance (child allowance and allowance for educational, care and training needs) (Kinderfreibetrag und Freibetrag für Erziehungs-, Betreuungs- und Ausbildungsbedarf) will increase to 8,388 euros for parents with joint tax assessment, and to 4,194 euros per parent. Child benefits (Kindergeld) will also increase from 1 January 2021, namely by 15 euros per month per child: For your first and second offspring, you will now each receive 219 euros per month, for the third child 225 euros, and from the fourth child, child benefit will rise to 250 euros. The relief amount for single parents (Entlastungsbetrag für Alleinerziehende) has already been increased to 4,008 euros for 2020 and 2021. In the Annual Tax Act 2020 (Jahressteuergesetz 2020), it was decided that this increased amount will also apply beyond 2021!
These lump sums will also increase
The long-term care lump sum (Pflege-Pauschbetrag) is even doubling this year, rising to 1,800 euros for care levels 4 and 5. In addition, there is now also money for the 2nd and 3rd care degree: 600 and 1,100 euros are newly introduced as care lump sums.
The disability lump sums (Behinderten-Pauschbetrag) will increase in 2021 for the first time in 45 years and will be doubled. A disability of 20 degrees will now receive a lump sum of 384 euros. The system runs in steps of 10 up to 100 degrees with 2,840 euros. Disabled people who are helpless in the sense of § 33b (6) EStG as well as blind and deaf people receive the doubled disability lump sum of 7,400 euros.
To strengthen associations and volunteers, the volunteering lump sum (Ehrenamtspauschale) will be increased to 840 euros and the exercise leader lump sum (Übungsleiterpauschale) to 3,000 euros.
Value added tax (Mehrwertsteuer)
The Corona-related reduction in VAT from July to December 2020 will be lifted from 1 January 2021. The old VAT rates of 19% (regular tax rate) and 7% (reduced tax rate) will apply again.
Simplified proof of donation (vereinfachter Spendennachweis) is now possible for donations up to 300 euros (previously only 200 euros). A bank statement is sufficient. New: Organizations whose purpose is either climate protection, free radio or local beautification are now included in the catalogue of charitable organisations.
Retirement provision (Altersvorsorge)
The sum of deductible contributions for old-age provision increases by 2% per year. In 2021, you will already be able to deduct 92% of your pension contributions.
Wage tax reduction (Lohnsteuerermäßigung)
If you apply to the tax office for a reduction in income tax, you will be required to file a tax return in the following year - unless your income in the calendar year does not exceed the limit of 12,250 euros in 2021. For jointly assessed persons, a new limit of 23,350 euros will apply from 2021.
Income tax rate (Einkommensteuertarif)
The income tax rate will be adjusted in 2021: The income limits at which the next higher tax rate becomes due will shift by 1.25% in each case.
Save taxes now!
With the online tax return from wundertax you can submit your tax return easily and inexpensively in only 15-20 minutes - no previous knowledge necessary! The customer satisfaction at wundertax was awarded "very good" by the TÜV. If you have any questions, our customer support will help you at any time.