The Altersvorsorgedepot, a state-supported private pension depot, can be used for tax purposes in two ways: through the state allowance (Zulage) or through the special expense deduction (Sonderausgabenabzug) under section 10a of the Income Tax Act (EStG). The tax office checks automatically which route is better for you, and the answer depends mainly on your marginal tax rate.
Short answer: From 1 January 2027 you can deduct pension contributions of up to 1,800 euros a year plus the allowance you are entitled to as special expenses (section 10a EStG). The tax office applies the deduction only if it is more favourable than the allowance (favourability test, section 10a(2)). With a 1,800 euro contribution and a 540 euro allowance, the threshold is a marginal tax rate of about 23 percent. Status: November 2026, law adopted.
The most important points at a glance
- The Altersvorsorgereformgesetz (pension reform act) has been adopted: the Bundestag passed it on 27 March 2026, the Bundesrat consented on 8 May 2026, and the act was promulgated in May 2026. The new depot rules apply from 1 January 2027.
- You can deduct pension contributions of up to 1,800 euros a year plus the allowance due for the contract.
- The tax office runs both routes and applies the more favourable one. You do not receive the allowance and the full deduction twice.
- With a 1,800 euro contribution (allowance 540 euros) the deduction pays off from about a 23 percent marginal tax rate; with a 360 euro contribution (allowance 180 euros), only from about 33 percent.
- Your marginal rate is not printed directly on your tax assessment. For a net example, use the tax calculator of the Federal Ministry of Finance.
Two routes: allowance or special expense deduction?
The allowance flows into the depot, regardless of how much tax you pay. The special expense deduction works through your tax return and lowers your taxable income. The higher your tax rate on your last euro, the larger the benefit. At a very low income a deduction hardly helps, while the allowance remains the same.
The two routes are not simply added together. Under section 10a(2) EStG the tax office checks automatically whether the deduction is more favourable than the allowance. If it is, your assessed income tax increases by the allowance entitlement, so you keep the allowance in the depot but effectively repay it through tax. If it is not, the deduction lapses. The basic idea of the allowance is explained in Altersvorsorgedepot Zulage berechnen (in German).
How much can you deduct from 2027?
The reform act raises the maximum in section 10a(1) EStG to 1,800 euros of pension contributions, plus the allowance due. Under the previous law the limit was 2,100 euros including the allowance. Contributions above 1,800 euros a year are no longer recognised for tax purposes and trigger no further allowance. The allowance also requires a minimum own contribution of 120 euros a year (section 86 EStG).
| Component (from 2027) | Rule | Source |
|---|---|---|
| Special expense deduction | Contributions up to 1,800 euros a year plus the allowance due | Section 10a(1) EStG |
| Favourability test | Deduction only if more favourable than the allowance; otherwise it lapses | Section 10a(2) EStG |
| Basic allowance | 50 percent on the first 360 euros, 25 percent on the next amount up to 1,800 euros, at most 540 euros | Committee report, Bundestag document 21/4996 |
| One-off allowance under 25 | 200 euros if you are not yet 25 at the start of the contribution year | Committee report, Bundestag document 21/4996 |
| Minimum own contribution | 120 euros a year | Section 86 EStG, Bundestag document 21/4996 |
Status of the figures: act as passed by the Bundestag (Bundesrat document 206/26) and committee report of the Finance Committee (Bundestag document 21/4996), 2026. The child allowance and the rules for spouses change the allowance and therefore the calculation, but are left out of the examples below.
Worked example: from which tax rate does the deduction pay off?
Assumption: you are 25 or older, have no children and pay 1,800 euros a year. The allowance is then 540 euros (180 euros on the first 360 euros plus 360 euros on the further 1,440 euros). You can deduct the 1,800 euro contribution plus the 540 euro allowance, so 2,340 euros. The tax saving is 2,340 euros times your marginal tax rate. In the favourability test the allowance is set against it: the deduction pays off if the saving exceeds 540 euros, and the extra benefit is the difference.
| Marginal tax rate (assumption) | Saving from a 2,340 euro deduction | More favourable route | Advantage over the allowance |
|---|---|---|---|
| 20 percent | 468 euros | Allowance (540 euros) | no additional benefit |
| 25 percent | 585 euros | Deduction | 45 euros |
| 30 percent | 702 euros | Deduction | 162 euros |
| 35 percent | 819 euros | Deduction | 279 euros |
| 42 percent | 982.80 euros | Deduction | 442.80 euros |
The threshold is 540 divided by 2,340, about 23 percent. The calculation is simplified: solidarity surcharge and church tax are not included, and your marginal rate depends on your whole income. We do not calculate income tax in euros here. For your net result, use the tax calculator of the Federal Ministry of Finance.
How does the threshold change with smaller contributions?
Assumption: you pay only 360 euros a year. The allowance is then 50 percent, so 180 euros. You can deduct 360 euros plus 180 euros, together 540 euros. The threshold is 180 divided by 540, about a 33 percent marginal rate. At 42 percent the saving would be 226.80 euros, which is 46.80 euros more than the allowance. The smaller the contribution, the stronger the allowance is relative to your own money, and the higher your tax rate must be for the deduction to pay off.
What does this mean for students with a part-time job?
Students with a mini-job or a working-student position often pay little or no income tax. The deduction then has little effect, while the allowance remains independent of the tax rate. If you are under 25, you also receive a one-off 200 euros. An overview of other tax topics for students is in Steuerliche Vorteile im Studium: Das kannst du 2026 absetzen (in German).
How does the deduction affect your tax burden?
The special expense deduction lowers your taxable income and therefore your income tax. How much that is depends on the bracket in which your last euro is taxed. This rate is called the marginal tax rate and is not the average rate across all income. The average rate is lower and leads to an expectation that is too small.
Which mistakes should savers avoid?
- Calculating only with the tax rate and forgetting the allowance: in the favourability test the saving minus the allowance counts.
- Wanting to deduct contribution and allowance separately: what you can deduct is the contribution plus the allowance, with no more than 1,800 euros of contribution.
- Confusing the average rate with the marginal rate.
- Paying in more than 1,800 euros and expecting extra support: above that there is neither allowance nor deduction.
What do you need for the tax return?
For the deduction you need your provider’s statement of your payments and the allowance. Keep your contract number and the amounts paid per year so that you can follow the calculation. You claim the deduction in your tax return, and the tax office then carries out the favourability test.
Frequently asked questions
Do I receive the allowance and the deduction at the same time?
Not twice. The tax office compares both routes and applies the more favourable one (section 10a(2) EStG). If it chooses the deduction, the allowance stays in the depot, but your assessed income tax increases by the allowance entitlement.
Does the deduction help if I pay no income tax?
Hardly. The deduction reduces tax, and without a tax liability there is nothing to reduce. In that case the allowance is the relevant part of the support.
How are returns and payouts in the depot taxed?
That is a separate question that this article does not answer. It plays no role in the choice between allowance and deduction. The rules are in the law, and a tax adviser can explain them.
Can I change my choice later?
You do not make a choice as such, because the tax office carries out the favourability test automatically. Whether you can still claim the deduction later depends on whether your tax assessment is already final. Ask the tax office or a tax adviser.
Does all of this apply already this year?
No. The new rules apply from 1 January 2027. Until then existing contracts follow the previous law, and contracts under the old version may no longer be sold from the end of 31 December 2026. Existing contracts keep their rules but can switch to the new rules by declaration.
How to proceed now
- Estimate your marginal tax rate, for example with the tax calculator of the Federal Ministry of Finance.
- Calculate both routes with your planned own contribution, deducting contribution plus allowance.
- Ask the provider in good time for the statement for your tax return.
- Plan your contribution so that it does not exceed the limit of 1,800 euros a year.
Related articles
- Altersvorsorge 2027: Der Überblick zu Depot, Frühstart-Rente und Riester (in German)
- Altersvorsorgedepot Zulage berechnen: 50 Cent je Euro bis 360 Euro (in German)
- Altersvorsorgedepot Rechner: Was am Ende auf dem Konto steht (in German)
- Altersvorsorgedepot Zulage: Wer sie bekommen kann und wer nicht (in German)
- Altersvorsorgedepot lohnt sich? Ab welchem Einkommen sich das Depot rechnet (in German)
Sources: Bundesrat, document 206/26, act as passed by the Bundestag (27 March 2026), Bundestag, document 21/4996, Finance Committee report (25 March 2026), Section 10a EStG, current version (retrieved November 2026) and Deutsche Rentenversicherung, Altersvorsorgereformgesetz (status October 2026)
Last updated: November 2026. This guide is general information, not individual advice.
