Many individuals wonder whether insurance can be deducted from taxes. The answer is: absolutely! This article explains which types of insurance can be deducted and what amounts can be achieved through this.
### Which Insurances Can Be Deducted from Taxes
The fundamental function of insurance is to provide protection in the event of an unforeseen and unfortunate incident. Many insurances concluded in Germany can be claimed as tax deductions. To do this, the insurance policies must be listed in the tax return as the following costs:
– Special retirement provisions,
– Income-related,
– Retirement security.
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The final amount that can be obtained by deducting insurance from taxes varies depending on the classification.
### Insurance as Retirement Costs (Special Expenses)
Most insurances concluded can be deducted as retirement costs under the so-called special expenses. It is important to note — only up to an amount of 1,900 euros (for employees) and 2,800 euros (for the self-employed). Examples of insurances as retirement costs include:
– Statutory health insurance,
– Long-term care insurance,
– Unemployment insurance,
– Liability insurance,
– Occupational disability insurance (also at the workplace),
– Term life insurance.
When filling out the tax return, it should be ensured whether the contributions to health, unemployment, and long-term care insurance are within the maximum amount. If this is exceeded, such insurances cannot be deducted from taxes as special expenses.
### Insurances as Income-Related Costs
Insurances related to occupational risk can be deducted as advertising costs. There is no set upper limit here, so the entire amount can be deducted from taxes. Which insurance policies count as income-related costs?
– Accident insurance.
– Professional liability insurance.
– Legal expenses insurance.
If the flat rate for advertising costs of one thousand euros is reached, every additional euro will reduce the final tax burden. The costs of work-related insurances can be declared as advertising expenses (this applies to employees) or as business expenses (for the self-employed).
### Insurance as Costs of Retirement Provision
Pension insurance is of great importance regarding the future and plays a significant role in the tax return. Pension expenditures can be entered on the first page of the so-called pension expenditure directory. Relevant information on pension insurance in 2021:
– 92% of the contributions paid count as special expenses. This percentage refers to the maximum amount. The employer’s share of the statutory pension insurance is added.
– Until 2025, the percentage will increase by two percentage points annually.
– A single person can expect a maximum amount of 25,787 euros.
– For married or registered partnerships, the amount is doubled.
In 2023, many changes occurred faster than expected — it will be possible to fully deduct pension insurance contribution rates from taxes.
### Tax Refund for Insurances — What Cannot Be Deducted
There are insurances that do not cause advertising costs and therefore cannot be deducted in the tax return. These include, among others:
– Property insurance (protects objects or inventory)
– Additional health insurance,
– Additional long-term care insurance,
– Full car insurance (however, it can be deducted by the self-employed).
When wishing to deduct insurances from taxes, the applicable rule should be observed: Living expenses that necessarily reduce economic performance are referred to by the legislator as extraordinary burdens. It is different with property insurance — these cannot be avoided, do not provide future security, and are not required for professional practice.
### Possibility of Deducting Insurance from Taxes — Summary
The free, intuitive, and completely secure tax return tool Taxando enables hassle-free deduction of insurances from taxes. No special tax knowledge is required — a phone with an installed app is sufficient.
Maciej Szewczyk
He gained experience as a consultant on IT projects for many international companies. In 2017, he founded the startup taxando GmbH, where he developed the innovative tax app Taxando, which simplifies the filing of annual tax returns.
Maciej Szewczyk combines technological expertise with in-depth knowledge of tax regulations, making him an expert in his field. In his private life, he is a happy husband and father and lives with his family in Berlin.
