Tax tips for taxpayers: Make the most of tax deductions and tax bonuses in 2025

The year is drawing to a close and most people are already looking forward to the Christmas season. But before we indulge in roast goose and gingerbread, we should give a few more thoughts to the subject of taxes. We have some interesting tax tips for taxpayers on how to reduce your tax burden.

Tip 1: Tax bonus for household-related services and handyman services

Almost everyone has expenses for household-related tradesmen and services. Repairs and maintenance work are carried out in every household and sometimes household help is also employed. Expenses for household-related tradesmen and services are also included in the landlord's or condominium association's operating cost statement. But you don't have to pay for these on your own. 20 percent of the expenses can be deducted directly from your income tax. This allows you to save up to 5,710 euros in income tax: 1,200 euros (20 percent of 6,000 euros) for handyman services in your own household (e.g. painting work, household repairs), 4,000 euros for a household-related employment relationship or household-related services, care and nursing services (20 percent of 20,000 euros) and 510 euros (20 percent of 2,550 euros) for a mini-jobber working in the household.

Note:
Don't miss out on these tax bonuses and make the most of them! All you need is an invoice and a non-cash payment this year. However, it may also be sensible and possible to defer payments until next year. Talk to your tradesperson or service provider and check what will save you the most tax!

Tip 2: Donations are tax-privileged

Natural disasters have once again cost lives, caused homelessness and triggered famine this year. Not forgetting the people in areas of the world affected by wars and conflicts. They urgently need help, especially donations from all over the world. Every donation for charitable and non-profit purposes can help. Donations can be deducted as special expenses for tax purposes. Up to 20 percent of the total amount of income can be deducted.

Anyone who is politically active and supports a party (within the meaning of Section 2 of the Political Parties Act, which is not excluded from partial state funding) can save tax. For example, 50 percent of expenses up to a maximum of EUR 1,650 can be deducted directly from income tax. If the total amount is higher, up to a further EUR 1,650 can be deducted as special expenses for the remaining expenses. For married couples and registered civil partnerships, this is double the amount.

Note:
For donations up to 300 euros, a bank statement or cash deposit slip is sufficient as proof instead of a donation receipt. The Federal Council recommends raising this limit to 400 euros as part of the Tax Amendment Act 2025.

Tip 3: Higher deduction of special expenses through advance payments

Advance payment of health insurance contributions can increase tax refunds or reduce tax arrears. Contributions to basic health insurance are fully deductible as special expenses. If you pay health insurance contributions in advance, you can increase your tax-deductible special expenses. For tax purposes, it is permissible to pay contributions for up to three years in advance. Ask your health insurance provider whether they allow this tax arrangement.

In addition to the contributions for 2025, the contributions for 2026, 2027 and 2028 could also be paid in this way. By paying contributions early, other pension expenses can then be claimed for tax purposes in the coming years up to an amount of EUR 2,800 (entrepreneurs) or EUR 1,900 (non-entrepreneurs). These include, for example, contributions to unemployment insurance, private liability and accident insurance, additional health and long-term care insurance (supplementary dental or foreign health insurance, treatment by a chief physician, etc.) or endowment and pension insurance policies taken out before 2005. Married couples can deduct up to 5,600 euros (business couples) or 3,800 euros (non-business couples).

Attention:
The advance payments must be deducted from the account by December 21, 2025 at the latest so that the tax office can still take the special expenses into account for 2025.

Tip 4: Deduct pension contributions to Rürup contracts

Old-age poverty is an issue that worries not only employees, but also the self-employed. Entrepreneurs are usually not covered by statutory insurance and have to make private provisions for their old age. There are various building blocks for this, some of which are also tax-privileged. For example, contributions to a Rürup pension contract are tax-deductible as special expenses. This means that 100 percent of the contributions paid to a Rürup contract, statutory pension insurance and occupational pension schemes are tax-deductible. The maximum amount is capped. For 2025, contributions of up to 29,344 euros (spouses/registered partners: 58,688 euros) are tax-deductible. This can result in considerable tax savings, but even smaller amounts are worth deducting.

Note:
For example, if you pay 5,000 euros into a Rürup contract this year, you can save over 2,000 euros in income tax at a tax rate of 42 percent.

Tip 5: Secure your pension allowance as an entrepreneur too

Additional private pension plans are also tax-privileged, for example through the so-called Riester subsidy. Self-employed persons, entrepreneurs and those insured in professional pension schemes are not usually eligible for this themselves. However, they can benefit indirectly via their spouse if they are employed or a civil servant and subject to pension insurance contributions. Even a mini-job with a personal share of 3.6% pension insurance contributions is sufficient. Then you, as an entrepreneur with your own private Riester contract, can also receive a pension allowance. Every Riester saver can receive a maximum allowance of 175 euros for such a contract. For each child, there is an additional 300 euros on top (185 euros for children born before 2008). In order to receive the full allowance, a personal contribution of 4 percent of the previous year's gross salary of the employee spouse must be paid, up to a maximum of 2,100 euros minus the allowance and at least a basic amount of 60 euros. Therefore, check the amount of the personal contribution in order to receive the unreduced allowance(s) for 2025.

Note:
Legislators are planning a comprehensive reform of private pension provision. On the one hand, there are to be improvements for Riester contracts that have already been concluded. This is to be achieved by increasing the maximum amount of special expenses to 3,500 euros for the year 2025, with basic grandfathering. Entrepreneurs should therefore ask their insurance company whether a further increase in contributions is still possible for 2025.

A new procedure for the deduction of special expenses is planned for new contracts. The statutory maximum amount will only apply to personal contributions and the allowance entitlement will be added. For budgetary reasons, the maximum personal contribution amount is to be 3,000 euros in the years 2026 to 2029 and 3,500 euros from 2030. The favorable tax treatment remains in place. A change to the new law is only possible by means of a separate, irrevocable declaration that applies uniformly to all existing contracts and takes effect from the following contribution year. The further legislative process remains to be seen.

Tip 6: Deduct maintenance payments and medical expenses as extraordinary expenses

Children usually also need financial support during their studies. However, child benefit is only available up to the age of 25. Parents who support their student children financially for longer can have the tax authorities contribute to the maintenance costs. For a dependent child who has no assets and only a low income, maintenance expenses of up to 12,096 euros and the basic health and long-term care insurance contributions owed by the child can be claimed as extraordinary expenses in 2025. However, the child's own income and earnings reduce the deductible maintenance expenses.

From 2025, maintenance payments must be made by bank transfer to an account of the person receiving maintenance. Cash payments are no longer eligible. A payment to a third party is only eligible if it settles a demonstrably existing liability of the dependent person (e.g. rent). Payments via payment service providers are recognized if they are made to the account of the dependent person. Transfers to e-wallets without a clear account allocation are generally not eligible.

You can also claim expenses for medical costs, e.g. new glasses, dentures or a stay at a spa, against tax. However, only if your reasonable personal burden is exceeded. This depends on your marital status, the children to be taken into account for tax purposes and your income. It amounts to between 1% and 7% of your income and is calculated in a staggered procedure. For families with children - with comparable incomes - the reasonable personal burden is significantly lower than for single people or married couples without children. You should therefore try to bundle the costs in one year. By making payments in December, you can still do something to ensure that you exceed the tax threshold in either 2025 or 2026. The decisive factor is the year of payment and not the invoice date. For example, you could pay for glasses that are not completed until January 2026 in 2025 or make a down payment to exceed the limit in 2025. On the other hand, you could agree with the service provider not to make the payment until January 2026.