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Pension 1,600 euros: how many taxes do I have to pay?

The higher the pension, the higher the income tax on it. At 1,600 euros a month, you might as well pay nothing.

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The general rule in Germany is that every pensioner is subject to the tax. Whether or not you have to pay taxes depends, among other things, on the amount of your pension. Find out here what applies to a gross monthly pension of 1,600 euros.

To calculate how much Guide you to one Pension of 1,600 euros gross per month pay, you must first know what benefits apply to you. Why next to that basic tax deductionto which all taxpayers are entitled, there is still the so-called for pensioners pension allowance.

How high it is for you depends on the year you retire (see table below). By 2040 it should drop to zero. From then on, new retirees would have to pay tax on their entire pension. However, there is still the basic allowance.

Only when you are retired with yours taxable part of the pension higher than this amount lie, you have to pay income tax to everyone. And only on the part that exceeds the basic allowance. This increases a little every year. It was subsequently increased to EUR 10,347 for the 2022 valuation year. Double the amount applies to married couples: EUR 20,694.

If your share of the taxable pension is higher than the basic allowance, the so-called Margin tax rate of 14 percent. The tax rate increases with the amount of the pension. More precisely: every euro that exceeds the next income limit is charged at the immediately higher tax rate. Is called progressive taxation. You can read more about how pension taxation works in our separate guide.

What does this mean for a pension of € 1,600 per month? Let’s calculate it using one example through:

Suppose you are retired in 2020, you are single, not in church, you have legal health insurance and you live in Bielefeld. So you have a 20 percent retirement allowance, so 80 percent of your pension is taxable. Let’s also assume that you receive the same pension of 1,600 euros per month, that is 19,200 euros per year. Then stay away 3,840 euros tax free (20 percent of 19,200 euros).

Since there was no pension increase in the West in 2021, this remains your final tax deduction. This is always determined in the year following retirement. If you had received more than the € 19,200 pension in 2021, the pension benefit of 20 percent would have been calculated on the basis of the highest pension. So you have to give it 19,200 euros 15,360 euros taxable (19,200 euros – 3,840 euros or 80 percent of 19,200 euros).

Of the gross annual pension of 15,360 euros before taxes, those required by law will now be paid Deducted health insurance and long-term care contributions (together 10.95 percent). However, the basis of calculation is the full annual pension of € 19,200. Since 10.95 per cent of 19,200 euros involves a total annual contribution of 2,102 euros, the taxable part of the pension decreases 13,258 euros (15,360 Euros – 2,102 Euros).

These 13,258 euros are now adjusted once again: ie from Advertising rate for pensioners from 102 euros and Allowance for special expenses from 36 euros. So your last taxable portion of the pension is 13,120 euros.

You can determine how much tax you have to pay each year Basic Income Tax Table to remove. It would be for 2020 653 euros.

The table below shows what applies to a pension of € 1,600 per month if you retire in a year other than 2020. For simplicity we have assumed that the pension did not increase between the retirement year and the following year. In reality, the personal income tax to be paid should therefore be a few euros more.

The higher the pension, the higher the income tax on it. At 1,600 euros a month, you might as well pay nothing.

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