Study dropout and tax hinge on a question many people ask only after leaving: what happens to the costs incurred up to that point? German tax law draws a strict line between a first degree and everything that follows. This guide shows how an abandoned degree is classified, what you can claim as special expenses, and why a loss carryforward does not apply in most dropout cases.
Short answer: Costs of an abandoned first degree are not income-related expenses (Werbungskosten), because deducting study costs as such requires a completed initial training or an employment relationship (§ 9 (6) EStG). You can claim them as special expenses (Sonderausgaben) up to 6,000 euros a year (§ 10 (1) no. 7 EStG). No loss carryforward arises. Last updated: November 2026.
The most important points at a glance
- Under § 9 (6) EStG, study costs are income-related expenses only if you previously completed an initial training or the study takes place within an employment relationship.
- An abandoned degree is not a completed initial training. By law, initial training means structured training of at least 12 months full time that ends with a final examination.
- Without income-related expenses you can deduct training costs of up to 6,000 euros per calendar year as special expenses (§ 10 (1) no. 7 EStG).
- The loss deduction under § 10d EStG applies to negative income. Special expenses are not income and therefore create no loss carryforward.
- By decision of 19 November 2019, the Federal Constitutional Court held § 9 (6) EStG in its 2011 version compatible with the Basic Law.
How does tax law classify an abandoned degree?
§ 9 (6) EStG regulates when the costs of vocational training or a degree are income-related expenses: only if you previously completed an initial training or the training takes place within an employment relationship. Initial training means structured training with a minimum duration of 12 months when full time and with a final examination. Without an examination it counts as completed at its scheduled end. If you abandon a degree before its scheduled end, you have not completed an initial training. Your degree remains a first degree for tax purposes, and its costs count as private living costs that are recognised only within special expenses.
What can you deduct of the costs?
§ 10 (1) no. 7 EStG allows the deduction of expenses for your own vocational training up to 6,000 euros per calendar year. This includes expenses for accommodation away from home. For travel the provision refers to § 9 (1) sentence 3 nos. 4 and 5 EStG. Typical items are semester fees, tuition, specialist literature, learning material and travel. How to treat trips to the university is explained in Fahrtkosten zur Uni absetzen (in German).
| Situation | Classification | Effect |
|---|---|---|
| Abandoned first degree without employment relationship | Special expenses up to 6,000 euros a year | Reduces taxable income, only to the extent there is income |
| Degree after completed initial training (second degree) | Income-related expenses | Loss possible, established under § 10d EStG |
| Degree within an employment relationship (for example a dual degree with a training contract) | Income-related expenses | Loss possible, established under § 10d EStG |
| Abandoned degree, then new initial training without employment relationship | still special expenses | No loss carryforward |
Why does dropping out create no loss carryforward?
The loss deduction under § 10d EStG concerns negative income that cannot be offset in the assessment year. It is carried back or forward, and the remaining carryforward is established separately. Special expenses are not part of income but are deducted afterwards from the total amount of income. That is why study costs that count only as special expenses, unlike income-related expenses, carry no loss into later years. If you had 3,000 euros of study costs in a year without income, you see nothing of these special expenses again for tax purposes.
The Federal Constitutional Court confirmed this line by decision of 19 November 2019 (2 BvL 22/14 and others): § 9 (6) EStG in the version of the Beitreibungsrichtlinie-Umsetzungsgesetz of 7 December 2011 is compatible with the Basic Law. The Federal Fiscal Court had referred the question by decisions of 17 July 2014, and the proceedings at the Federal Constitutional Court ran under the case numbers 2 BvL 22/14 to 2 BvL 27/14. As far as the constitutionality of the rule is concerned, the topic is therefore no longer open. The court did not rule on abandoned degrees. That an abandoned degree is not a completed initial training follows from the wording of § 9 (6) EStG. In an individual case the tax office decides. The loss carryforward for study costs works where the law allows income-related expenses, such as a second degree. See Loss Carryforward in Studies: Tax Return Step by Step and Second Degree: Costs, Child Benefit, BAföG and Taxes.
What does this look like in an example?
Assumption: You abandon your first degree in 2026. Costs that year were 1,800 euros (semester fee, literature, travel). As a working student you earned 7,000 euros of wages.
- The employee allowance of 1,230 euros comes off the wages (§ 9a EStG), leaving 5,770 euros.
- The 1,800 euros of study costs are special expenses and reduce income to about 3,970 euros.
- That is below the 2026 basic allowance of 12,348 euros (§ 32a EStG). No tax arises, so the deduction brings you nothing more, and a carryforward is not possible.
If you had earned 20,000 euros of wages in the same year, the same 1,800 euros would reduce your taxable income. The effect therefore depends on whether you have income in the year of the costs. For a tax calculation in euros, use the tax calculator of the Federal Ministry of Finance.
What applies if you start vocational training afterwards?
Because the abandoned degree is not a completed initial training, the next training also remains an initial training under the wording of the law. If it takes place within an employment relationship, for example as company-based training with a training allowance, its costs are income-related expenses (§ 9 (6) EStG). For school-based training without an employment relationship, special expenses remain the rule. Funding and credit for prior study are covered in Ausbildung nach dem Studienabbruch (in German).
How do you claim the costs?
You enter the expenses for the abandoned degree under special expenses in your tax return. For this you collect invoices, semester fee notices and travel records. If you have not yet filed a return for earlier years, you can submit it as long as the limitation period runs. It is four years as a rule (§ 169 (2) AO). Notes are in Steuererklärung als Student rückwirkend (in German).
Frequently asked questions
Can I retroactively turn an abandoned degree into an initial training?
Under § 9 (6) EStG, initial training requires training with a final examination. Without an examination it counts as completed at its scheduled end. Dropping out early does not meet that.
Can I claim study costs as income-related expenses if I dropped out?
Only if the degree took place within an employment relationship or you had already completed an initial training. Otherwise the special expenses deduction remains.
Do special expenses lapse if I had no income?
They work only in the year of payment against existing income. Unlike income-related expenses, a carryforward is not provided, because the loss deduction under § 10d EStG applies to negative income.
What about BAföG that I must repay?
Repayment follows its own rules. See the overview in BAföG nach dem Studienabbruch zurückzahlen (in German).
How to proceed now
- Check whether your degree ran within an employment relationship or whether you had already completed an initial training.
- Compile the costs of the abandoned degree per year and sort them into fees, literature, travel and accommodation.
- Enter the amounts under special expenses when you file a return for the year concerned, and watch the deadline.
- Keep receipts and settle doubts about classification with the tax office or in personal advice, for example through Academycon.
Related guides
- Steuern 2027 für Studierende und Berufseinsteiger (in German)
- Ausbildung nach dem Studienabbruch (in German)
- Loss Carryforward in Studies: Tax Return Step by Step
- Second Degree: Costs, Child Benefit, BAföG and Taxes
- Tax Benefits for Students in Germany: What You Can Claim
Sources: § 9 EStG, income-related expenses (as of November 2026), § 10 EStG, special expenses (as of November 2026), § 10d EStG, loss deduction (as of November 2026), Federal Constitutional Court, decision of 19 November 2019, 2 BvL 22/14 and others
Last updated: November 2026. This guide is general information, not individual advice.
