The saver’s allowance (Sparerpauschbetrag) is the annual tax-free allowance on investment income such as interest, dividends and capital gains. Single people can receive €1,000 a year tax-free, and jointly assessed married couples €2,000. The amount is set out in the Income Tax Act (Einkommensteuergesetz) and applies per person.
Short answer: The saver’s allowance is €1,000 a year for single people and €2,000 a year for jointly assessed married couples (§ 20 para. 9 EStG). Investment income up to this amount remains tax-free if you submit an exemption order (Freistellungsauftrag) to your bank or claim it in your tax return. Last updated: October 2026.
The key points in brief
- The saver’s allowance is €1,000 for single people and €2,000 for jointly assessed couples.
- Actual business expenses for investment income cannot be deducted, because the allowance replaces them.
- The amount applies per person, not per account.
- Without an exemption order, the bank withholds the flat-rate withholding tax (Abgeltungsteuer).
- The total of all exemption orders may not exceed the allowance.
What counts as investment income?
This includes, for example, interest on savings accounts and fixed-term deposits, dividends and gains from selling securities. The allowance is deducted from your income before any tax is due. The law excludes the deduction of actual business expenses, such as custody fees.
How does the allowance work in practice?
The following table shows a simplified example for a single person with no losses.
| Investment income per year | Of which tax-free | Taxable (assumption, single) |
|---|---|---|
| €500 | €500 | €0 |
| €1,000 | €1,000 | €0 |
| €1,500 | €1,000 | €500 |
| €2,500 | €1,000 | €1,500 |
Assumption: you receive €1,500 in interest and dividends, have no losses and are single. €1,000 remains tax-free, and the remaining €500 is subject to the flat-rate withholding tax. Whether and how much tax is due depends on further factors, such as church tax.
How do you apply the allowance with your bank?
With an exemption order, you tell your bank up to what amount it should not withhold flat-rate withholding tax. The total of all exemption orders may not exceed the allowance. If you have several accounts with different banks, you spread the amount and stay below the limit overall. Any remainder that is not covered can be claimed in your tax return.
Does the allowance also apply to students?
Yes, if you have investment income. The allowance is personal and does not depend on whether you are studying. Whether investment income plays a role for child benefit (Kindergeld) or BAföG is something you should clarify with the responsible office. That office examines which income and assets are taken into account.
Frequently asked questions
Does the money in my instant-access savings account count towards the allowance?
Yes. Interest on instant-access and fixed-term deposit accounts is investment income. It counts towards the same total as dividends and capital gains until the allowance is reached.
Does the allowance also apply if I make losses?
Losses from securities are offset against gains before the allowance applies. The exact rules on offsetting losses are set out in the Income Tax Act. If your losses are substantial, it is worth checking them in your tax return.
What happens if I exceed the limit?
The part above the allowance is subject to the flat-rate withholding tax. The bank remits it, to the extent that no exemption order covers it. If your investment income is higher than the allowance, it is worth taking a look at your tax return.
Related reading
- Glossary: Retirement provision depot explained simply
- Tax return for students: how to get your money back
- Taxes for students: when you pay and when you do not
- Glossary: Rentenpunkte explained simply
Sources: § 20 EStG: Income from capital assets (accessed October 2026), § 44a EStG: Waiver of withholding tax (last updated October 2026).
Last updated: October 2026. This guide is general information, not individual advice.
