🇩🇪 Germany

Lohnsteuer-Ermäßigung

Payroll Tax Reduction

Medium ~15 min TaxPayrollDeductions

/ What is this form?

Instead of waiting for your annual tax return to reclaim overpaid tax, you can apply for a Freibetrag (tax-free allowance) that reduces your monthly payroll tax withholding in real time. This improves monthly cash flow throughout the year.

The most common reasons to apply: high commuting costs (Pendlerpauschale), childcare costs, double household expenses (doppelte Haushaltsführung), or alimony payments (Unterhalt).

The Freibetrag is entered electronically in the ELStAM system and automatically applied by your employer's payroll. You still need to file an annual tax return when you have a Freibetrag.

/ Who needs this form?

Employees with a long commute (over 20 km one-way)
Parents paying for childcare (Kinderbetreuungskosten)
People maintaining a double household for work reasons
People paying alimony (Unterhalt)

/ What you need before you start

Estimated annual expenses for each deductible category

Employer name and tax number

Steuer-ID

ELSTER account (recommended) or paper form

/ Step-by-step guide

1 Calculate Your Expected Deductions

Estimate your annual deductible expenses: commuting costs, childcare, double household, alimony, etc.

2 Check the Threshold

Deductions must exceed the Arbeitnehmer-Pauschbetrag of €1,230/year to be worthwhile.

3 Complete the Application

Fill in the Antrag auf Lohnsteuer-Ermäßigung form, available online or at your Finanzamt.

4 Submit to Finanzamt

Submit online via ELSTER or in person at your local Finanzamt.

5 Freibetrag Applied Automatically

Your employer's payroll system is updated automatically. Monthly tax withholding reduces immediately.

/ Key fields explained

Field	What to enter	Common mistake
Werbungskosten	Your estimated total work-related expenses for the year, above the €1,230 Pauschbetrag.	Entering the total amount instead of only the amount exceeding €1,230 — only the excess reduces withholding.

/ Common mistakes to avoid

Forgetting that you still need to file an annual tax return — the Freibetrag doesn't replace it.

Overestimating deductions — if actual expenses are lower, you may owe tax.

Not knowing the Freibetrag is valid for 2 years and needs renewal.

/ Frequently asked questions

Is it worth applying?

If your work-related expenses or other deductible costs exceed €1,230/year, yes. Common cases: commuting over 15 km, childcare costs, or double household.