Tax that would otherwise come back to you with your annual return can partly be saved in your monthly pay: with a Lohnsteuer allowance (Freibetrag), your employer withholds less each month. You can apply for 2027 now. For the current year, the deadline is 30 November.
Who benefits?
The hurdle is the so-called application threshold: all deductible costs together must exceed €600 in the calendar year. Work-related expenses (Werbungskosten) count only above the employee lump sum, currently €1,230; special expenses only above €36 (€72 for married couples). Typical items include long commutes, training, work equipment, childcare costs and larger donations.
An example: if you expect €2,000 in work expenses in 2027, you are €770 above the lump sum under current law, so you can apply. At €1,500 the gap is just €270, which is not enough without other items.
The €600 threshold does not apply in some cases, according to the North Rhine-Westphalia tax administration: disability and survivor lump sums, the increased relief for single parents, craftsmen and household-related services, and energy-saving work on an owner-occupied home. For single parents the application can therefore pay off even with low costs.
How to apply, and what is the catch?
The easiest route is ELSTER, the tax authorities’ online portal. Registration requires an activation code sent by post, so start early if you have never used it. The alternative is the paper form “Antrag auf Lohnsteuer-Ermäßigung und zu den Lohnsteuerabzugsmerkmalen” with annexes. If you ask for the same or a lower allowance than last year, the main form plus the simplified application is enough. On request, the allowance can run for two years.
The catch: the tax is only brought forward, not reduced. Anyone who applies for an allowance generally has to file an income tax return, with exceptions such as very low annual pay. And if your costs turn out lower than you stated, you may face a back payment.
On timing, Berlin gives 1 October as the start of applications for the following year, while the NRW tax administration says 1 November. If the application reaches the tax office by the end of January 2027, it takes effect retroactively from January; later applications apply only from the following month. 30 November 2026 is the last chance for an allowance in the current year, but it would only affect December pay and rarely pays off.
One uncertainty is the lump sum itself. The draft Income Tax Reform Act 2027 would raise it from €1,230 to €1,430. The cabinet approved the draft on 2 September, the Bundestag held its first reading on 8 October, and the Bundesrat gave its opinion on 16 October. It is not yet law. If the increase comes, the example above flips: €2,000 in expenses would be only €570 above the lump sum, below the threshold. Our assessment, with caution: anyone just over €600 can wait for the Bundestag’s decision, since retroactive effect until the end of January means little is lost.
Sources: Finanzamt NRW, Service Berlin, Haufe, Der Betrieb
