Understanding tax · Jurisdiction DE

Taxation of the pension

The taxable share of a statutory pension depends on the year the pension started. The tax office sets the tax. Finmon does not.

In more detail

As of the text of Income Tax Act section 22: for a pension starting in 2026 the taxable share is 84.0 percent. From a start in 2058 the table names 100 percent. The difference between the annual pension and this share is the tax-free part. It applies from the year after the pension starts, for the life of the pension, and is not recalculated when the pension is adjusted in the ordinary way.

Background

A taxable share is not yet a tax debt. Only taxable income and the tariff produce the tax. Someone who has further income beside the pension reports it on the return. German statutory pension insurance informs people about the share. The tax office assesses. Finmon names no tax-free amount in euro and no basic allowance.

An example

A pension starts in 2026. 84 percent of that annual pension is the taxable share in the table, and 16 percent is at first the tax-free part. Whether income tax follows depends on other income and on the tariff. Finmon knows neither.

A common misconception

Every statutory pension is taxable at the same percent in the same year.

The percent follows the year of the start. Someone who started earlier stays with the share for that start.

Source: EStG § 22. Last reviewed: 2026-10-31. Editorially reviewed on 2026-10-31. Next review 2027-10-31. Version 0.2.0. Finmon explains. It does not advise. Not investment, tax or legal advice.