Where are expense allowances for municipal councillors entered?

Expense allowances for municipal councillors should be recorded under income from employment in the section "Other income > Tax-free expense allowances".
Expense allowances from federal or state funds, specified in a federal or state law or regulation and listed as expense allowances in the budget, are always fully tax-free (§ 3 No. 12 Sentence 1 EStG).

However, expense allowances from public funds paid for public benefits are tax-free up to 250 Euro per month (§ 3 No. 12 Sentence 2 EStG). For voluntary part-time work for a charitable organisation, 840 Euro of the income per year is tax-free under § 3 No. 26a EStG, provided you cannot prove higher expenses.