Full deduction of pension expenses from 2023

Contributions to statutory pension insurance and other basic pension schemes (e.g. occupational pension schemes or Rürup pensions) are tax-deductible as special expenses under section 10 (1) no. 2a EStG.

Transitional arrangement until 2025

Until 2022, these pension expenses were gradually taken into account for tax purposes: Since 2005, the deductible percentage increased annually by two percentage points – from an initial 60% to 94% in 2022. This was based on section 10 (3) EStG.

Example deduction amounts for single persons (maximum amount):

Year	Maximum amount (single persons)	Deductible percentage	Effectively deductible
2021	25.787 Euro	92%	23.724 Euro
2022	25.639 Euro	94%	24.101 Euro

Full tax deductibility from 2023

The Annual Tax Act 2022 introduced the full deductibility of pension expenses early from 01.01.2023 (section 10 (3) sentence 6 EStG). This means that contributions to basic pension schemes can be claimed for tax purposes at 100% from 2023 onwards.

Current maximum amounts for single persons according to section 10 (3) sentence 1 EStG:

Year	Maximum amount (single persons)	Deductible percentage	Effectively deductible
2023	26.528 Euro	100%	26.528 Euro
2024	27.566 Euro	100%	27.566 Euro
2025	29.344 Euro	100%	29.344 Euro

For jointly assessed spouses or civil partners, the maximum amounts are doubled accordingly.

Background: Avoidance of double taxation

The early full deductibility of pension expenses is intended to prevent possible double taxation of pensions. The Federal Fiscal Court (BFH) confirmed the current pension taxation as constitutional in two rulings dated 19.05.2021 (ref. X R 20/19 and X R 33/19), but also indicated future double taxation – particularly for future pensioners.

The legislative change is therefore a preventive measure to ensure that pension contributions are tax-free during the working phase and that pension payments are appropriately taxed during the payout phase.