Investment & Wealth
Disability Insurance
is insurance tax-deductible
BU insurance tax deductible: Secure maximum benefits
The contributions to your disability insurance can reduce your tax burden. But how exactly is a disability insurance deductible and what applies to the pension? Understand the rules and optimise your tax return.
The topic in brief and concise terms
Contributions to disability insurance can be deducted as other precautionary expenses up to €1,900 (employees) or €2,800 (self-employed), but are often exhausted by health and nursing care contributions.
The private disability insurance pension is taxed only with the low yield portion, whereas disability pensions from occupational pensions (bAV) or Rürup pensions are fully taxable.
Adding a disability insurance rider to a Rürup pension allows for higher tax deductions on contributions (up to €27,566 in 2024). [4,1]
Tax Deductibility of BU Contributions: Understanding the Basics
Contributions to an independent occupational disability insurance (SBU) are generally tax-deductible as other pension expenses. This applies to both employees and self-employed individuals. However, deductibility is limited by annual maximum amounts. For employees and civil servants, this amounts to 1,900 euros, and for self-employed individuals, it's 2,800 euros per year. These maximum amounts are often already reached through contributions to basic health and nursing care insurance. In such cases, the disability insurance contributions no longer have a tax-reducing effect. Contributions to disability insurance as an additional insurance (BUZ), for instance, as part of a term life insurance policy, can also be claimed as other pension expenses, with the same maximum amounts applying. Therefore, a thorough examination of your individual situation is crucial to fully leverage the potential tax deductibility of your disability insurance. Learn more about how you can deduct your occupational disability from taxes. The next section highlights where exactly you can specify these expenses in your tax return.
Correctly stating disability insurance contributions in your tax return: Here's how
To claim your disability insurance contributions for tax purposes, these must be entered in the 'Anlage Vorsorgeaufwand' section of your income tax return. For independent disability insurance (SBU), this is usually under 'other miscellaneous retirement expenses'. Some sources mention line 45 (as of the 2023 tax return), others line 49. [3,2Ü,4] Therefore, always check the current form or consult a tax advisor. Contributions to a disability insurance supplement (BUZ) for a Rürup pension, on the other hand, are recorded along with the Rürup contributions under 'contributions to old-age provision'. [6,4] It's important to know that even with a gross income of around 2,000 euros per month, contributions to health and nursing care insurance can exceed the deductible maximum amount of 1,900 euros for employees. An calculation with a disability insurance calculator can provide some initial indications of contributions. The tax treatment of the paid-out disability pension is another important aspect we will now consider.
Taxation of the Disability Insurance Pension: What to Expect in Case of a Claim
If you receive benefits from your occupational disability insurance, this disability pension must be taxed. For a private disability insurance policy (third tier of the three-tier model), the taxation is only based on the so-called yield portion. The amount of the yield portion depends on the expected duration of the pension: The shorter the remaining pension period until the contractually agreed end age, the lower the taxable portion. For instance, if the pension period is still fifteen years, only sixteen percent of your occupational disability pension must be taxed. If the taxable part of your pension is below the annual tax-free allowance (€11,604 for 2024, €12,084 for 2025), no taxes are due. A disability pension from a company pension scheme (second tier), on the other hand, is taxed in full at your personal tax rate. The same applies to disability pensions from Rürup contracts (first tier), which are taxed subsequently. Find out also how a private disability pension tax calculator works. For specific situations, further details should be considered.
Expert Knowledge: Layer Model, Rürup Combination and Current Judgments
The German pension system is divided into three tiers, which significantly influences the tax treatment of your disability insurance. Most private disability insurance contracts belong to the third tier (private provision). Here, contributions are only partially deductible, but the pension is only taxable with the low yield portion. An additional disability insurance (BUZ) to a Rürup pension (basic pension, first tier) offers special advantages: Since 2023, the contributions can be deducted in full as pension expenses, up to an annual maximum amount of 27,566 Euros for singles in 2024. [4,1,5] Often, a condition is that the BUZ portion does not exceed forty-nine per cent of the total contribution. However, in the case of benefit payments, the pension from such a Rürup BUZ is then (almost) fully taxed. Our expert tip: Pay attention to the correct entry of your pension scheme in the tax return.
The following points are relevant for experts:
Legal costs: Costs for a legal dispute over the disability pension can, under certain circumstances, be deductible as business expenses if they are existentially necessary (according to § 33 EStG). [3-]
Reimbursed taxes: If an insured person receives reimbursement for taxes incurred in the context of a loss of earnings, this reimbursement is also subject to income tax, as confirmed by a BFH ruling (IX R 5/23). [2-]
Contribution amounts: Contributions to the statutory pension insurance and to professional pension schemes also count as deductible pension expenses and reduce the scope for Rürup contributions.
Pension expense attachment: The exact line numbers can change annually; for 2023, line 45 or 49 was often mentioned for SBU. [3,2Ü]
The choice of the right tier and contract arrangement has significant effects on the tax treatment of your disability insurance. Therefore, careful planning is essential. We are happy to support you in finding the optimal solution for your situation.
Request an individual risk analysis now: Have your insurance situation checked free of charge and receive concrete optimization suggestions.
More useful links
The Bundesfinanzministerium provides documents on income tax regulations.
The Bundesfinanzministerium offers insights into current income tax regulations.
The Deutsche Rentenversicherung offers statistics and reports on disability pensions.
The Verbraucherzentrale provides a PDF document with valuable consumer information.
Destatis, the Federal Statistical Office, publishes press releases and data.
The Bundeszentrale für politische Bildung (bpb) provides comprehensive information on social insurance.
FAQ
Are contributions to occupational disability insurance tax-deductible?
Yes, contributions to disability insurance can be claimed as other pension expenses in the tax return. For employees and civil servants, a maximum amount of 1,900 euros applies, and for the self-employed, it is 2,800 euros. However, this is often already exhausted by contributions to health and long-term care insurance.
How is the pension from an occupational disability insurance taxed?
The pension from a private disability insurance (3rd tier) is only taxed with the so-called income share. This depends on the remaining term of the pension. Disability pensions from an occupational benefit scheme (2nd tier) or a Rürup pension (1st tier) are generally fully taxable.
Where do I enter my disability insurance in the tax return?
The contributions are entered in the pension expenses annex. For an independent disability insurance, this is under "other pension expenses" (e.g., line 45 or 49, depending on the tax year). Contributions to a BUZ with Rürup pension are recorded under retirement pension expenses.
What is the difference between SBU and BUZ for tax purposes?
Both contributions to independent disability insurance (SBU) and to a disability supplementary insurance (BUZ) to a private risk or pension insurance fall under other pension expenses with limited maximum amounts. A BUZ to a Rürup pension can allow for higher deductions within the framework of retirement pension expenses.
Do disability insurance contributions always reduce taxes?
No, not always. As the maximum amounts for other pension expenses (1,900 euros / 2,800 euros) are often already reached or exceeded by contributions to statutory health and care insurance, stating disability insurance contributions frequently does not lead to any additional tax savings.
Is there a tax allowance for the disability insurance pension?
There is no specific allowance for the disability insurance pension itself. However, only the income share of the private disability insurance pension needs to be taxed. If the entire taxable income (including the taxable part of the disability pension) is below the general personal allowance (e.g., 11,604 euros for 2024), no income tax is payable.
