Insurance and Taxes: How to Optimize Your Tax Burden Cleverly
9 May 2025
8
Minutes
Katrin Straub
CEO at nextsure
Did you know that many of your insurance premiums can reduce your tax burden? Every year, millions of Germans miss out on cash because they do not list all deductible insurances on their tax returns. Find out here how to optimise your finances and which insurances you can claim and how.
The topic in brief and concise terms
Many insurance contributions such as health, nursing care, liability, and accident insurance are tax-deductible as special expenses or work-related expenses.
For other precautionary expenses, maximum amounts apply (one thousand nine hundred euros for employees, two thousand eight hundred euros for self-employed individuals), while basic health and long-term care insurance contributions are fully deductible beyond that.
Pension expenses (e.g. Rürup pension) have been fully deductible up to a maximum amount of 27,566 euros (single persons, 2024) since 2023.
Understanding the Basics: Which Insurances Are Tax-Relevant?
Many insurance contributions can reduce your tax burden by being classified as special expenses or work-related expenses. Generally, the tax authorities distinguish between provident expenses and occupational insurance costs. Provident expenses primarily include policies that serve to secure one's own health and future. This includes, for instance, contributions to health and nursing care insurance, which are usually fully recognised for basic coverage. Accident and liability insurance can often also be claimed. For employees, there is a maximum amount of one thousand nine hundred euros for other provident expenses, while for the self-employed, it is two thousand eight hundred euros. Professionally induced insurances, such as professional liability insurance, can be deducted as work-related expenses or business expenses. This distinction is crucial for the correct entry in your tax return and the maximisation of your tax savings. In the next section, we will take a closer look at the maximum amounts.
Maximise savings potential: detailed look at maximum amounts and deductibility
The amount of deductible insurance contributions is limited by maximum amounts, which vary depending on professional situation. For employees, civil servants, and pensioners, the maximum amount for other pension expenses is one thousand nine hundred euros annually. Self-employed individuals who fully cover their health insurance contributions can claim up to two thousand eight hundred euros. Importantly: Contributions to basic health and long-term care insurance are fully recognized even if they exceed these maximum amounts. In such cases, however, there is no further allowance for the deduction of additional pension expenses, such as private liability or accident insurance. Contributions to retirement provisions, like statutory pension insurance or the Rürup pension, have been fully deductible since two thousand twenty-three, up to the maximum amount of twenty-seven thousand five hundred and sixty-six euros for singles in the year two thousand twenty-four. A correct tax return is worth real money here. Next, you will learn where exactly to enter these expenses.
Practical Guide: Accurately Declaring Insurance in Your Tax Return
The correct entry of your insurance contributions in the tax return is crucial for acceptance by the tax office. Most pension expenses should be included in the Pension Expenses section. Contributions to statutory health and nursing care insurance should be entered, for instance, in lines eleven to thirteen of this section. Separate lines are designated for private health and nursing care insurances. Contributions to other miscellaneous pension expenses, such as liability or accident insurance, are recorded from line forty-eight onwards. Profession-related insurances like a disability or accident insurance with a professional component, belong in the income-related expenses section (for employees) or as operating expenses in the EÜR section (for self-employed individuals). A term life insurance policy is also declared as a miscellaneous pension expense in the Pension Expenses section. The following list shows typical entry points:
Health and nursing care insurance (basic): Pension Expenses section, lines 11ff.
Private liability insurance: Pension Expenses section, line 48ff.
Motor vehicle liability insurance: Pension Expenses section, line 48ff.
Accident insurance (private portion): Pension Expenses section, line 48ff.
Disability insurance (self-employed): Pension Expenses section, line 45 (as of 2023). [3ää]
Term life insurance: Pension Expenses section, line 50 (HUK24). [5]
Retirement expenses (e.g. Rürup): Pension Expenses section, lines 4-10. [3:-]
Our expert tip: Collect all contribution proofs of your insurances throughout the year so that nothing is forgotten in the tax return. Many insurers provide annual certificates that contain all relevant data. Now onto the specific regulations for certain types of insurance.
Special Cases in Focus: From Retirement Planning to Dental Supplement
In addition to the standard insurance policies, there are some special cases with their own tax regulations. Contributions to retirement savings, such as the Riester pension, are treated separately and recorded in Anlage AV. [6ä|>--] The Rürup pension (basic pension) is considered a retirement expense and is deductible as special expenses up to a maximum of twenty-seven thousand five hundred sixty-six euros (single, two thousand twenty-four). [4|ä-] An occupational disability insurance can be deducted as other precautionary expenses, provided that the maximum amount of one thousand nine hundred euros or two thousand eight hundred euros has not yet been exhausted by health and nursing care insurance contributions. [1ä:-] Contributions to a supplementary dental insurance can also be claimed as other precautionary expenses, considering the mentioned maximum amounts. [2ä:ö2025|] This also applies to motor vehicle liability insurance. [2ä:ö2025|] Please consider the following points for special insurances:
Term life insurance: Contributions are deductible as other precautionary expenses, but the maximum amount is often already reached. [2:&-]
Overseas health insurance: Can be deducted as other precautionary expenses if it serves as basic coverage. [4?-]
Endowment insurance policies (old contracts before 2005): Contributions may still be deductible under certain circumstances. [6ä|>--]
Private pension insurance (old contracts before 2005): Similar regulations apply as with endowment insurance policies. [6ä|>--]
These details illustrate the importance of carefully reviewing your own insurance situation. In the following, we will examine the legal principles and current developments.
Understanding legal frameworks and recent judgments
The tax deductibility of insurance premiums is regulated by the Income Tax Act (EStG), particularly in Paragraph Ten. [2§10--] This paragraph defines special expenses, which include provisions for future needs. The Citizens' Relief Act brought significant changes since two thousand and ten, especially regarding the deductibility of health and long-term care insurance contributions. [1:ä-] Current rulings of the Federal Fiscal Court (BFH) can also influence the tax treatment, for example, in the distinction between taxable and non-taxable benefits. [3?–-ü] For instance, the BFH has ruled that reimbursements from insurance for loss of earnings, including the income tax due on them, are to be taxed as related income. [2-:-] It is advisable to keep informed about legal changes and relevant court rulings, as these can directly affect your own tax situation. A private life insurance policy is also subject to specific tax regulations. The complexity highlights when professional advice is prudent.
Avoid errors and utilize optimization potential
When declaring insurance contributions in your tax return, mistakes can easily be made that can cost you money. A common error is forgetting deductible insurances or misclassifying them into special expenses or professional expenses. Ensure you have the necessary documentation for all claimed contributions, such as premium invoices or insurance certificates, available. [5ö-] While tax authorities do not always request these directly, they can demand them if in doubt. Another point is the correct allocation of contributions that cover both private and professional risks, such as in the case of accident or legal protection insurance. [2ää?-] Here, the professional portion must be accurately determined and claimed as professional expenses, which often leads to higher tax savings than treating them as special expenses. [6ä|-] Review your contracts annually and adjust your tax return if necessary. The direct insurance has its own tax implications. To fully exploit all potential, individual advice can be beneficial.
Our expert tip: Advice for your individual situation
The tax optimisation of your insurance contributions can be complex and heavily depends on your individual life and income situation. While this article provides a good overview and initial approaches, professional advice can often uncover further specific savings potential. Especially with multiple insurance contracts, self-employment, or special forms of provision such as a unit-linked pension insurance, consulting an expert is worthwhile. At nextsure, we not only help you select the right insurance cover, but also provide you with advice on how to optimise the tax aspects of your insurance. Careful planning and accurate reporting of your insurance can reduce your tax burden by several hundred euros annually. Take advantage of this opportunity and don't leave money unchecked at the tax office. The next step is the concrete implementation.
Your Path to Tax Savings: Next Steps and Contact
More useful links
The Federal Ministry of Finance offers comprehensive information on tax topics in Germany.
The Federal Statistical Office provides data and facts on income, consumption, and living conditions in Germany.
The Consumer Advice Centre provides insights into important aspects of money and insurance, empowering consumers.
The German Pension Insurance offers detailed information on Riester pension insurance and retirement planning.
The Federal Ministry of Health delivers official information on health insurance contributions and regulations.
On the Gesetze im Internet platform, you can find the full text of the Income Tax Act, including Paragraph 10 on special expenses.
Haufe provides articles and information on tax topics, such as the deductibility of insurance contributions as expenses for employees.
FAQ
Which types of insurance are generally tax-deductible?
In principle, contributions to health and long-term care insurance (basic coverage), unemployment insurance, liability insurance (private, animal owner, motor vehicle liability), accident insurance, occupational disability insurance, and term life insurance can be deducted as special expenses. Contributions to retirement plans (e.g. statutory pension, Rürup pension) are also deductible. Work-related insurance (e.g. professional liability) can be claimed as business expenses.
Where do I enter my insurance contributions in the tax return?
Most pension expenses are entered in the "Anlage Vorsorgeaufwand". Professionally related insurance costs are included as income-related expenses in the "Anlage N" (for employees) or as business expenses in the "Anlage EÜR" (for the self-employed). Contributions to the Riester pension scheme are recorded in the "Anlage AV". [5,6ä|-]
Are there maximum amounts for deductible insurance?
Yes, for other provident expenses (e.g., liability or accident insurance), there is a maximum amount of one thousand nine hundred euros for employees and two thousand eight hundred euros for the self-employed. Contributions to basic health and long-term care insurance can still be fully deducted beyond this. For pension expenses (e.g., Rürup pension), the maximum amount for 2024 is twenty-seven thousand five hundred sixty-six euros (for singles). [4,4|ä-]
Can I deduct the car insurance from my taxes?
Yes, employees can deduct contributions to motor liability insurance as other deductible expenses. Self-employed individuals may also be able to claim contributions to comprehensive insurance as business expenses if the vehicle is used for business purposes. [1-ä-,3--]
What is the difference between special expenses and deductible expenses for insurance?
Special expenses are private expenditures for provisions (e.g., health, liability insurance) that receive tax benefits. In contrast, work-related expenses (for employees) or business expenses (for self-employed individuals) are professionally induced costs (e.g., professional liability, occupational portion of accident insurance). Work-related expenses reduce the income from the respective activity and can often be deducted without limit, whereas special expenses usually are subject to maximum amounts.
Do I need proof for all insurances for the tax office?
Although you no longer need to submit evidence with your tax return by default, you should carefully keep all invoices and certificates from your insurers. The tax office may request them during an audit. For contributions already listed on the income tax certificate (e.g., statutory health insurance), a separate proof is usually not required. [5ö-]
