Tax allowance

The tax-free allowance is an amount up to which income remains tax-free. It serves to exempt a basic level of income from taxation in order to ensure that people with low incomes are not disproportionately burdened. The components and specific features of the tax-free allowance can vary by country and tax system. Here are some general aspects:

• Basic tax-free allowance: This is the amount up to which a person's income remains tax-free. In many countries, there are different allowances for individuals, married couples or families.
• Specific allowances: In addition to the basic allowance, there are often further allowances for specific expenses or life circumstances, such as for education, raising children or old-age provision.
• Calculation and application: The tax-free amount is generally applied when calculating income tax by deducting it from total income. The remaining amount is then subject to taxation according to the respective tax rates.
• Research and updates: Information on tax allowances can be found on tax authority websites, in tax laws and from tax advisors. These amounts are often adjusted annually to take account of inflation and other economic changes. Changes are usually announced by the government or relevant authorities.
• Country-specific differences: Each country has its own rules and amounts for tax allowances. It is important to find out about the specific rules in each country, especially if you are moving or have income in several countries.
• Germany (2024): From January 1, 2024, the basic tax-free allowance in Germany will be €11,604 for individuals and €23,208 for married couples. Income below this limit is tax-free.

In summary, the tax-free allowance is an important part of the tax system, which serves to exempt a minimum amount of income from taxation and thus reduce the tax burden for low-income earners.