BU insurance tax-deductible: Secure maximum benefits
9 Jun 2025
4
Minutes
Katrin Straub
CEO at nextsure
The contributions to your occupational disability insurance can reduce your tax burden. But how exactly is a disability insurance tax-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 pension expenses up to €1,900 (employees) or €2,800 (self-employed), but are often exhausted by health/long-term care contributions.
The private occupational disability pension is only taxed on the small amount of income, while occupational disability pensions from occupational Pension Schemes or Rürup are fully taxable.
A BU supplemental insurance with a Rürup pension allows for higher tax deductions on contributions (up to 27,566 euros in 2024). [4.1]
Tax Deductibility of Disability Insurance Contributions: Understanding the Basics
Contributions to an independent occupational disability insurance (SBU) are generally tax-deductible as other precautionary expenses. This applies to both employees and the self-employed. However, the deductibility is limited by annual maximum amounts. For employees and civil servants, this limit is €1,900, for the self-employed €2,800 per year. These maximum amounts are often already reached through contributions to basic health and nursing care insurance. In such cases, the occupational disability contributions do not further reduce taxes. Contributions to occupational disability insurance as an additional insurance (BUZ), for example to a term life insurance, can also be claimed as other precautionary expenses, with the same maximum amounts applying. A detailed examination of your individual situation is therefore crucial to fully exploit the potential tax deductibility of your occupational disability insurance. Learn more about how you can deduct your occupational disability for tax purposes. The next section highlights where exactly to state these expenses in your tax return.
Correctly declare disability insurance contributions in the tax return: Here's how
To claim your contributions to disability insurance on your taxes, they must be entered in the 'Vorsorgeaufwand' section of your income tax return. For a standalone disability insurance (SBU), this is usually found under ‘other miscellaneous precautionary expenses’. Some sources mention line 45 (as of the 2023 tax return), others line 49. [3,2Ü,4] Always check the current form or consult a tax advisor. Contributions to additional disability insurance (BUZ) with a Rürup pension are recorded along with Rürup contributions under ‘contributions to old-age provision’. [6,4] It's important to know that with a gross income of around 2,000 euros per month, the contributions to health and long-term care insurance may exceed the deductible maximum amount of 1,900 euros for employees. A calculation with a disability insurance calculator can provide initial indications of contributions. The tax treatment of the paid-out disability pension is another important aspect that we will now consider.
Taxation of the disability insurance pension: What to expect in the event of a claim
If you receive benefits from your occupational disability insurance, this disability pension must be taxed. For a private disability insurance (third layer of the three-layer model), taxation only occurs with 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-upon end age, the lower the taxable portion. For example, if the pension duration is fifteen more years, only sixteen percent of your disability pension is taxable. If the taxable part of your pension is below the annual tax allowance (11,604 euros for 2024, 12,084 euros for 2025), no taxes are due. [2,2Ü] However, a disability pension from a company pension scheme (second layer) is taxed in full at your personal tax rate. The same applies to disability pensions from Rürup contracts (first layer), which are taxed later. Find out also, how a private disability pension tax calculator works. In special constellations, further details must be observed.
Expert Knowledge: Layer Model, Rürup Combination and Recent Judgments
The German pension system is divided into three layers, which significantly affects the tax treatment of your disability insurance (BU). Most private disability insurance contracts belong to the third layer (private provision). Here, contributions are only partially deductible, but the pension is only taxable with the low yield portion. A BU supplementary insurance (BUZ) to a Rürup pension (basic pension, first layer) offers special advantages: Since 2023, contributions can be fully deducted as pension expenses, up to the annual maximum amount of 27,566 euros for singles in 2024. [4,1,5] It is often required that the BUZ portion does not exceed forty-nine percent of the total contribution. In the event of benefits, the pension from such a Rürup-BUZ is then (almost) fully taxed. Our expert tip: Make sure your pension provision is correctly entered in your tax return.
The following points are relevant for experts:
Legal costs: Costs for a legal dispute regarding disability pension can potentially be deductible as income-related expenses if they are existentially necessary (according to § 33 EStG). [3-]
Reimbursed taxes: If a policyholder also receives a refund for taxes in the context of a loss of earnings damage, this refund is also subject to income tax, as confirmed by a BFH judgment (IX R 5/23). [2-]
Contribution amount: Contributions to the statutory pension insurance and professional pension schemes also count as deductible pension expenses and reduce the scope for Rürup contributions.
Pension expenses annex: The exact line numbers may change annually; for 2023, line 45 or 49 was often mentioned for SBU. [3,2Ü]
The choice of the right layer and contract design has significant implications for the tax treatment of your disability insurance. Careful planning is therefore essential. We are happy to help you find the optimal solution for your situation.
Optimise your tax burden with the disability insurance
The tax deductibility of occupational disability insurance is a complex topic with many facets. While contributions are generally deductible, maximum amounts of 1,900 euros or 2,800 euros for other pension expenses often limit the actual tax savings. An exception is the combination with a Riester pension, where contributions up to 27,566 euros (2024) can be claimed as retirement pension expenses. [4,1] In the event of a claim, the private disability pension is only taxed at the favourable capital gains rate, while pensions from occupational pensions or Riester contracts are fully taxable. It is important to understand the relationships between insurance and taxes precisely. Individual advice helps you develop the right strategy for you and make the most of all tax benefits. Knowing which insurances are deductible is a first step. We at nextsure offer you a comprehensive analysis of your situation. Request your individual risk analysis now.
More useful links
The Federal Ministry of Finance provides documents on income tax regulations.
The Federal Ministry of Finance offers insights into current income tax regulations.
The German Pension Insurance provides statistics and reports on reduced earning capacity pensions.
The consumer advice centre offers a PDF document with valuable consumer information.
Destatis, the Federal Statistical Office, publishes press releases and data.
The Federal Agency for Civic Education (bpb) provides comprehensive information on social security.
FAQ
Are contributions to occupational disability insurance tax-deductible?
Yes, contributions to the occupational disability insurance can be claimed as other precautionary expenses in the tax declaration. For employees and civil servants, a maximum amount of 1,900 euros applies, and for self-employed individuals, 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 occupational disability insurance (3rd tier) is only taxed on the so-called profit portion. This depends on the remaining term of the pension. Occupational disability pensions from a company pension 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 plan annex. For an independent occupational disability insurance, this is under 'other miscellaneous pension expenses' (e.g., line 45 or 49, depending on the tax year). [3,2Ü] Contributions to an occupational disability insurance with Rürup pension are recorded under retirement pension expenses.
What is the difference between SBU and BUZ in taxation?
Both contributions to independent occupational disability insurance (SBU) and to additional disability insurance (BUZ) for private risk or pension insurance fall under other pension expenses with limited maximum amounts. A BUZ with a Rürup pension can allow for higher deductions within the scope of retirement provision expenses.
Do disability insurance contributions always reduce taxes?
No, not always. Since the maximum amounts for other precautionary expenses (€1,900 / €2,800) are often already reached or exceeded by contributions to statutory health and nursing insurance, stating disability insurance contributions often does not lead to any additional tax savings.
Is there a tax exemption for the disability pension?
There is no specific tax-free allowance for the disability insurance pension itself. However, only the income portion of the private disability insurance pension has to be taxed. If the total taxable income (including the taxable portion of the disability insurance pension) is below the general tax-free allowance (e.g. €11,604 for 2024), no income tax is due. [2]
