Receiving a pension without paying taxes

How much pension can be received tax-free? - The amount you could potentially acquire without paying taxes

In a significant development, the full taxation of pensions, originally planned for 2040, has been delayed until 2058 due to the Growth and Chance Act. This means that retirees can continue to enjoy a larger tax-free allowance for a longer period.

For new retirees, the taxable share of the pension is 83 percent, with only 13,481 euros subject to taxation in 2024. However, this threshold for taxation is set to decrease each year as the share of the pension that is taxed increases. In contrast, long-standing retirees who retired as early as 2005 can still receive 50% of their pension income tax-free, resulting in a higher pension of up to 19,758 euros per year.

The tax office must check the total income of retirees on a case-by-case basis. Retirees can deduct advertising cost allowance of 102 euros, special expenses allowance of 36 euros, and retirement provisions of up to 1,739 euros. This means that retirees with advertising costs, special assessments, or extraordinary burdens may have a total income higher than the tax-free allowance and still be tax-free.

In 2024, the highest annual gross pension that remained tax-free for new retirees was 16,243 euros. For couples, the tax-free amount is double for new retirees. In the current year, 2025, the threshold for filing a tax return is 12,084 euros. If a retiree had more than 11,604 euros in pension income in the previous year (2024), they generally have to file a tax return.

In Germany in 2026, new pensioners (starting regular retirement age) must pay no income tax on their gross annual pension income up to approximately €14,400 to €17,000, depending on individual circumstances. This is inferred from the projected basic tax-free allowance for singles around €12,348 and the fact that the taxable portion of the pension rises gradually, with a sample calculation indicating tax exemption up to around this pension level if no other income exists.

The tax-free allowance for new retirees decreases each year as the share of the pension that is taxed increases. The maximum monthly tax-free amount for long-standing retirees is €1,646. The Ministry of Finance lists the tax-free pension amount annually, with new retirees in 2024 receiving 16,243 euros without paying taxes (singles).

In summary, the delay in the full taxation of pensions provides relief for retirees, allowing them to enjoy a larger tax-free allowance. Retirees can also benefit from various deductions and allowances, ensuring that many can still receive a portion of their pension income tax-free. However, it is essential for retirees to keep track of their total income and file a tax return if necessary.