How to determine the taxable income?

How is taxable income calculated?

Taxable income is determined according to a fixed scheme. The first step is to calculate and add together the income from the seven types of income:

1. Income from agriculture and forestry: Operating income minus operating expenses.
2. Income from business operations: Operating income minus operating expenses.
3. Income from self-employment: Operating income minus operating expenses.
4. Income from employment: Income minus income-related expenses (at least the employee allowance). For pension payments, the pension allowance and the supplement to the pension allowance are also deducted.
5. Income from capital assets: Income minus income-related expenses (at least the income-related expenses allowance) and saver’s allowance. If capital gains are included in the assessment, a deduction for foreign withholding tax is also possible.
6. Income from renting and leasing: Income minus income-related expenses.
7. Other income: Income minus income-related expenses (at least the income-related expenses allowance).

 

Scheme for calculating taxable income:

Operator	Calculation step
	Total income from the types of income
./.	Old-age relief amount
./.	Relief amount for single parents
./.	Allowance for farmers and foresters
Result: Total income
./.	Loss deduction (loss carryforward from the previous year)
./.	Special expenses
./.	Extraordinary burdens
+	Reimbursement surplus for health insurance or church tax (§ 10 para. 4b EStG)
Result: Income
./.	Allowances for children
./.	Hardship allowance
Result: Taxable income