How to Maximize Your Tax Refund in Germany (Part 2)

This is part two of our guide to tax deductions in Germany. In part one, we broke down how German tax deductions actually work — from flat rates vs. actual costs to marginal tax rates – and what each deduction is worth. We covered the big, everyday categories: commuting, home office, childcare, and income-related expenses.

In part two, we look at so-called special expenses — things like insurance premiums, church tax, donations, school tuition, and alimony — as well as extraordinary burdens like medical costs. And if you’ve had income from freelancing, rentals, or investments, we’ll go over what you can deduct there too.

You don’t need to know all the rules in detail — if you file your tax return with tax software like Wundertax, they do the math for you. But if you want to understand how the tax system in Germany actually works, or check whether you’re overlooking a possible tax deduction, this guide is for you.

Table of Contents

• Special Expenses

  • Insurance and Pension Contributions

  • Tuition Fees

  • Private School Tuition

  • Donations to Charity

  • Alimony Payments

  • Church Tax

• Extraordinary Burdens

  • Medical Expenses

  • Other Extraordinary Expenses

• Tax Deductions for Other Sources of Income

• The Easiest Way to Maximize Your Tax Refund in Ger …

Here’s the catch though: there’s a cap on how much of insurance premiums you can deduct. For employees, it’s €1,900 per year; for the self-employed, it’s €2,800. And because your basic public health insurance often already uses up most or all of that amount, many supplementary insurances (like dental or disability coverage) won’t impact your tax refund in Germany.

If you’re working toward your first university degree or initial vocational qualification, you can deduct up to €6,000 per year on your tax refund in Germany. This includes tuition itself, study materials, printing, travel to the university, and related costs. If it’s a second degree, further training, or career change — those expenses go under income-related expenses instead.

If your child attends a recognized private school in Germany or the EU, you can deduct 30% of the tuition, up to €5,000 per child per year. This tax deduction in Germany only covers tuition — expenses like meals, after-school programs, and transport don’t count. You’ll need proper documentation from the school to include this deduction in your tax refund in Germany.

Donations to German-based, tax-privileged organizations are tax-deductible up to a capped amount of 20% of your total income. This includes donations to churches, registered charities, political parties, and independent voter associations. Donations to foreign charity organizations unfortunately don’t qualify for a tax deductions in Germany. Always get an official donation receipt – a regular bank transfer confirmation may not be enough to be accepted for your tax refund in Germany.

You can deduct up to €13,805 per year in alimony payments to a former spouse or someone you are legally obligated to support — provided they are financially in need. The payments must be documented and made by bank transfer, and the recipient must agree to be taxed on the income. The Finanzamt usually requires confirmation from the recipient as part of your return when processing this deduction for your tax refund in Germany.

If you incurred legal costs while arranging or enforcing those alimony payments, those costs may also be tax-deductible. However, general legal fees from divorce proceedings — like lawyer costs or court filings unrelated to maintenance — do not count as tax deductions in Germany.

Church tax is one of those quirks of the system — it’s a tax, but it also counts as a deductible expense. If you're registered as a member of a religious denomination that collects church tax in Germany — like the Catholic or Protestant church — and you're employed, the tax is automatically withheld from your salary and recorded on your payslip. That amount is then included in your tax return and reduces your taxable income — not your final bill, but the income the Finanzamt uses to calculate your tax refund in Germany. If you’ve made additional payments outside of payroll — for example, in a mixed-religion marriage — those can be entered manually.

Pro tip: If you’re looking to save even more on taxes in Germany, officially leaving the church (Kirchenaustritt) is a way to stop paying church tax altogether — just be ready to explain that choice to your relatives over Christmas. Church tax in Germany is 8-9% of your income tax (not your taxable income). So, for someone earning €60,000 a year, with an estimated income tax of around €13,000, that’s about €1,100 in church tax annually – not a trivial amount! Leaving the church is straightforward: you simply fill out a form at your local registry office (Standesamt) or district court (Amtsgericht) and pay a small administrative fee (around €30).

Once your costs exceed that threshold, these types of out-of-pocket expenses are eligible for a tax refund in Germany:

Expenses for wellness treatments, over-the-counter supplements, or cosmetic procedures with no medical necessity aren’t deductible. For example, dental work done purely for aesthetic reasons (like getting veneers) won’t qualify, but braces might. Alternative therapies — like acupuncture or osteopathy — might be, but usually require a doctor’s certificate or pre-approval. Preventive treatments exist in a grey area: some of them — like flu shots, or screenings ordered due to a medical condition or family history — are usually accepted, while others that are more general in nature are not. In all cases, only the out-of-pocket portion (such as co-payments or costs not reimbursed by your insurance) is eligible to reduce your taxable income and increase your potential tax refund in Germany.

Other types of extraordinary expenses, such as funeral costs or financial support to relatives, are handled differently and aren’t subject to the reasonable burden threshold. Funeral costs can be claimed as a tax deduction in Germany if you paid them for a close family member and they weren’t fully covered by the estate. Disability-related costs can also be claimed, and in many cases there’s a lump sum available, which depends on the severity of the disability and replaces the need to track individual costs to get a tax refund in Germany.

If you financially supported a close relative in need — a parent, a child (not receiving Kindergeld), or sometimes even a grandparent or a sibling — you can claim up to €10,908 per year as a tax deduction in Germany. Additional amounts may be possible if you covered their health insurance or education costs. The key conditions are that the person must have very low income and assets, live in Germany or the EU/EEA, and the support must be documented with bank transfers, a statement of their financial situation, and a short explanation of why support was necessary. When properly documented, these contributions can reduce your taxable income and result in a higher tax refund in Germany.

If you have income outside of standard employment — whether from freelancing, side gigs, renting out property, or investments — there’s a separate set of tax deductions available that can significantly reduce your taxable income and help you maximize your tax refund in Germany.

For landlords, many property-related costs are fully deductible. That includes things like repairs, maintenance, insurance, property management fees, mortgage interest and even depreciation. Freelancers and self-employed people can claim a broad range of business-related expenses as tax deductions in Germany, from equipment and software to advertising, travel, and professional services. If you’ve taken out a loan to fund part of your work — say, to buy a new laptop or renovate a studio space — the interest on that loan is tax-deductible too.

If you’ve earned money from selling stocks or receiving dividends, or if you’ve had interest income from savings accounts, you’re entitled to a €1,000 tax-free allowance for capital income. This amount is per person, so if you’re married and filing jointly, the amount doubles. If you’ve used a German brokerage like Trade Republic, they usually report taxes automatically — or you can get an annual tax summary from them if you want to include it manually in your tax return. This is one reason why using a German-based broker is a lot better than going with a foreign platform – it makes your life dramatically easier when it’s time to get your tax refund in Germany. I personally use Trade Republic for both my everyday banking and investing – you can read my full guide here.

There are several ways to file your tax return in Germany, from the official ELSTER portal to full-service tax advisors – if you want to compare your options, you can read my full breakdown here in my Tax Return 101 guide. That said, for most people — including employees with or without extra income, self-employed and freelancers — tax software usually offers the best value for money. It guides you through the process in plain English, calculates best tax deductions automatically (no need to decide between flat rate or actual costs), and estimates your German tax refund — no tax knowledge required.

Personally, I’ve had good experience with Wundertax (also known as germantaxes.de), and will be using them again this year. I like how it guides you through everything clearly — with simple explanations and a structure that makes it easy to spot deductions you might otherwise miss. I also like that the tool shows you the full calculation of your German tax refund, so that you can see exactly how each tax deduction affects your refund. The cost for submitting your declaration through Wundertax is €34.99, but you don’t have to pay until you’ve filled everything out and seen your refund estimate — if you’re not obligated to file a tax return, you can decide at the end whether it’s worth submitting at all.

If your situation is more complicated (investment portfolios, foreign income, multiple properties) and you’re comfortable doing your tax return in German, WISO Steuer (€45.99 one-time purchase, or €35.99 as a yearly subscription) is also worth a look — it offers more flexibility, but less guidance. For most people, Wundertax strikes the right balance between ease of use and functionality when it comes to maximizing your tax refund in Germany.

That wraps up part two of this tax refund guide. Together with part one, this gives you a full picture of how tax deductions in Germany work — and which of them are actually worth paying attention to. Filing your tax return can feel overwhelming — but once you understand how the system works, it becomes a lot easier.

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