Which expenses can expats deduct to lower their tax bill?

Short answer: You can deduct relocation costs, commuting, insurance premiums, childcare and a home-office allowance to lower your German tax bill.

Which expenses can expats deduct to lower their tax bill? The German Income Tax Act (EStG) offers generous deductions that many newcomers overlook:

• Relocation costs – flights, movers and agency fees for your first German apartment are fully deductible when the move is job-related.
• Commuting (Entfernungspauschale) – €0.30 per kilometre (one-way) from day one; rises to €0.38 from the 21st kilometre.
• Health & pension insurance – statutory or private contributions plus long-term care premiums lower taxable income euro for euro.
• Childcare costs – two thirds of fees for crèche, kindergarten or after-school care (up to €4,000 per child, per year).
• Home-office allowance – €6 per day, capped at €1,260 for 2024/25, even if you work from the kitchen table.

Additional write-offs include professional training, language courses and tax-advisor fees. At Finance for Expats we gather receipts in English or German, map them to the correct Anlage forms and optimise deductions under Germany’s progressive tax rates. Start your refund hunt via our tax filing service; we estimate savings before you submit.

Key take-aways:

• Relocation, commuting, insurance, childcare and home office cut taxable income.
• Proper receipts and form selection are essential to pass Finanzamt audits.
• Finance for Expats prepares bilingual, deduction-maximised returns.