In life, there are various situations in which we are unable to fulfil our professional duties. If illness-related incapacity for work lasts longer, sickness benefit is paid. In this article, we focus on sickness benefit in the tax return. We answer the question of whether it is taxable and what impact it has on the final assessment. Enjoy reading.
Who is entitled to sickness benefit in Germany?
All employees as well as people who receive unemployment benefit I (ALG I) in Germany are entitled to sickness benefit, provided they have statutory health insurance and are off sick for a longer period. It is intended to compensate for loss of income in the event of incapacity for work due to illness or a serious accident.
People who are unable to fulfil their professional duties due to illness and receive the appropriate medical certificate continue to receive their full salary for the first 6 weeks, which is still paid by the employer. In Germany, this is called “continued remuneration in the event of illness” (Entgeltfortzahlung im Krankheitsfall) and is regulated by the Entgeltfortzahlungsgesetz (Continued Remuneration Act).
If the illness or accident turns out to be more serious and we are unable to return to work after this period, we are entitled to sickness benefit. No additional application is required for this – in practice, the approval procedure starts automatically on the basis of the medical certificate, even if the health insurance fund may request additional documents or confirmation of data. It is only important to remember to send the medical certificate directly to the health insurance fund – then our insurance company will contact us. Recently, the certificate has been transmitted electronically.
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How much is sickness benefit in Germany?
The amount of sickness benefit is generally 70% of the gross basic salary and at most 90% of the net salary – but only up to the contribution assessment ceiling. It should be noted that one‑off bonuses from the employer over the last 12 months, such as a Christmas bonus, are added to the net salary. For the year 2026, sickness benefit is limited to the statutory maximum of 135.63 euros per day – this amount is adjusted annually and depends on the contribution assessment ceiling.
For unemployed persons receiving ALG I, the amount of sickness benefit is based on the most recently received unemployment benefit payment.
Sickness benefit in Germany is tax-free, but that does not mean that it can be omitted from the tax return. If sickness benefit exceeds 410 euros in the year, it must be declared in the tax return, as it can affect the tax rate on other income. This is a common reason for discrepancies between the expected tax refund and the final assessment from the tax office.
How do you apply for sickness benefit in Germany?
After the first 6 weeks of incapacity for work, during which the employer continues to pay the full salary (so‑called continued remuneration), responsibility passes to the health insurance fund, which pays sickness benefit from the 43rd day of illness. To start the process, an electronic certificate of incapacity for work is required. The eAU – Arbeitsunfähigkeitsbescheinigung (certificate of incapacity for work) – must be transmitted to your health insurance fund – this usually happens automatically or via an online portal (e.g. mein.aok.de or meine.tk.de) and should be done within 7 days.
The application for sickness benefit can be submitted online or by post, together with the required documents such as payslips for the last 12 months and the current eAU. In practice, the salary data are transmitted by the employer, and the health insurance fund contacts the insured person only if information needs to be supplemented.
The first payment is usually made after around 3–4 weeks and is calculated retroactively from the 43rd day of illness, and sickness benefit can be paid for a maximum of 78 weeks. It is important to report the illness to the employer on the first day (by phone or e‑mail) and to use the option of tracking the processing status of the application in the health insurance fund’s app. In the event of a rejection, you have the right to lodge an objection within one month.
How long can you receive sickness benefit?
However, sickness benefit cannot be received indefinitely – it is paid for a maximum of 78 weeks within three years for the same illness (including the 6 weeks of continued salary payment by the employer). After this period, if health problems persist that make work impossible, the only option is to apply for a pension.
After discussing the most important information on benefits in the event of incapacity for work, we now turn to the formalities with the tax office and answer the previously asked question: Does sickness benefit have to be taxed?
Do you have to pay tax on sickness benefit?
Sickness benefit in Germany is tax-free, but it is subject to the progression clause (Progressionsvorbehalt). This means that it can increase the tax burden on regular income, provided we earned such income in the year in question.
It should also be noted that contributions to the pension insurance, unemployment insurance and long-term care insurance are still deducted from the sickness benefit. However, this is done automatically before the money is transferred to the entitled person’s account.
Sickness benefit and tax – what does assessment with progression mean?
The sickness benefit itself is therefore not taxed,but due to the progression clause it can lead to a higher tax burden. Here is an example for illustration: We receive wages for 6 months and then suffer an accident, after which we receive sickness benefit. Although no tax is withheld from the sickness benefit, it increases the tax rate that we pay on the income we earned during the period in which we were still working. In this way, the tax burden can be significantly higher than if only the pure employment income were taxed.
Sickness benefit in the tax return – does it have to be declared?
The German tax system stipulates that if we receive a tax‑free wage replacement benefit of more than 410 euros in the relevant tax year, it must be declared in the tax return to the tax office.
Even if sickness benefit is tax‑free, it can – as already mentioned – influence the applicable tax rate. Therefore, it must be entered in the annual tax return under “Einkommensersatzleistungen” (income replacement benefits) as a wage replacement benefit.
If we have received sickness benefit and are obliged to submit a tax return, the health insurance fund will provide an appropriate certificate (e.g. certificate for the tax office), often in electronic form.
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FAQ
Does sickness benefit in Germany have to be entered in the tax return?
Yes, sickness benefit must be declared as an income replacement benefit in the annual tax return. However, this does not mean that tax is levied directly on the sickness benefit itself.
Is sickness benefit subject to tax in Germany?
Sickness benefit is tax-free in Germany, so it is not taxed like a normal salary. However, due to the progression clause, it can increase the tax rate applied to your other income.
From what amount of sickness benefit is a tax return required?
If, in the relevant tax year, more than 410 euros in sickness benefit or other replacement income was received, a tax return generally has to be filed. This also applies to people who would normally not be required to submit a tax return to the tax office.
Where is sickness benefit entered in the German tax return?
Sickness benefit is entered in the section for replacement income. Depending on the tax software, the field may be labeled differently, but it always concerns tax‑free benefits subject to the progression clause.
Which document confirms the payment of sickness benefit?
You can request a “certificate for the tax office” (Bescheinigung für das Finanzamt) for the sickness benefit paid out from your health insurance fund. The document shows the amount of the benefit that must be taken into account in the tax return.
Does the health insurance fund report sickness benefit directly to the tax office?
Yes, health insurance funds usually transmit the data on benefits paid electronically to the tax office. Nevertheless, the taxpayer should check the amount and enter it correctly in their tax return.
Are the first 6 weeks of illness also reported as sickness benefit?
No, during the first 6 weeks the employer generally continues to pay the normal salary in the event of illness (continued remuneration). Only the benefit that is subsequently paid by the health insurance fund is reported as sickness benefit.
Can sickness benefit reduce a tax refund from Germany?
Yes, sickness benefit can reduce a tax refund because it affects the tax rate applied to your other income. This mainly affects people who have worked part of the year and received sickness benefit during another part of the same year.
How high is sickness benefit in Germany?
As a rule, sickness benefit amounts to 70 % of the gross salary, but no more than 90 % of the net salary. Social security contributions may still be deducted from this amount, which is why the amount transferred to the bank account is lower than the last salary.
How long can you receive sickness benefit?
Sickness benefit can be received for a maximum of 78 weeks within 3 years for the same illness. The first 6 weeks, during which the employer continues to pay the salary, are counted towards this maximum period.
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.
