Saver's allowance 2024: Optimize your tax-free allowance for stocks

The saver's allowance for 2024 is €1,000 per person and €2,000 for married couples filing jointly. Up to this threshold of €1,000, capital gains such as interest, dividends, and capital gains remain tax-free. Above this, a withholding tax of 25 percent plus solidarity surcharge applies.

With a tax exemption order at your bank, you avoid unnecessary tax withholding from the start. This way, more of your returns stay with you instead of flowing to the bank upfront.

What the saver's allowance exactly means

The saver's allowance, colloquially also called saver's tax exemption, is a legally defined tax-free allowance for income from capital assets. The legal basis is found in § 20 para. 9 of the German Income Tax Act (EStG).

Up to this allowance, your capital income remains free from tax withholding. The saver's allowance simultaneously covers costs incurred in connection with securities on a flat-rate basis.

Which income falls under the allowance

This includes interest from savings accounts and deposit books, dividends from stocks, and gains from the sale of securities. Distributions from funds and ETFs also count. These capital gains are added together and set against the €1,000 allowance.

Saver's allowance 2024 amounts at a glance

The amounts have been in effect since January 1, 2023, and remained unchanged for 2024. The federal government also plans no adjustment for 2025 and 2026. Specifically, the rule looks like this:

• Single filers: €1,000 per year
• Married couples and same-sex civil partners filing jointly: €2,000 per year
• Children: each child has their own saver's allowance of €1,000

The increase starting in 2023

Before 2023, the allowance was €801 for individuals and €1,602 for couples. Under the 2022 Annual Tax Act, the saver's allowance increased from €801 to €1,000, or from €1,602 to €2,000 respectively.

This represents an increase of approximately 24.8 percent and was the first increase in over a decade. The previous increase dated back to 2009, when the withholding tax on capital income was introduced.

Withholding tax on capital income: What applies above the 2024 saver's allowance

If your capital gains exceed the saver's allowance, withholding tax on capital income applies. It amounts to 25 percent on the excess. In addition, there is a solidarity surcharge and possibly church tax.

The total tax burden in detail

• Withholding tax on capital income: 25 percent on capital gains above the €1,000 allowance
• Solidarity surcharge: 5.5 percent of the withholding tax
• Total burden without church tax: 26.375 percent
• Church tax: an additional 8 or 9 percent of the withholding tax, depending on the state

At a total burden of 26.375 percent, correctly using the allowance makes a noticeable difference in your returns. The withholding tax on capital income generally has a discharge effect, meaning that the tax is settled through withholding at the source.

Those who pay church tax end up with a total burden of 27.82 or 27.99 percent depending on the state. This form of taxation applies uniformly to interest, dividends, and capital gains.

The tax exemption order as a central instrument

A tax exemption order is an instruction to your financial institution to pay out capital income up to the specified amount without tax withholding. Without this instruction, the bank automatically withholds full capital income tax, even if your income is below the €1,000 allowance.

How to place the order

You can place the order online, via app, or at a branch office. Many institutions allow you to complete the instruction directly in online banking in a few minutes.

You must provide your tax identification number. Once you place a tax exemption order, it applies indefinitely and renews automatically. Another requirement is that the sum of all orders does not exceed your personal maximum amount.

Modification and revocation

You can modify or revoke a tax exemption order at any time. If your expected capital gains change, simply adjust the exempted amount. This way, your tax exemption orders remain current.

Saving capital income tax with multiple accounts

If you maintain accounts and a securities account with multiple institutions, you must split the €1,000 allowance. The sum of all tax exemption orders must not exceed the maximum of €1,000 or €2,000. Improper allocation costs real money.

With careful planning, you can deliberately save capital income tax without having to claim refunds from the tax office later.

Example of a sensible allocation

If you expect €600 in interest and dividends from one bank and €400 from another provider, distribute the allowance accordingly: €600 to the first bank, €400 to the other. This way, you use the full €1,000 and avoid tax withholding.

What happens without a tax exemption order

A forgotten tax exemption order becomes expensive. With €1,200 in capital income without an exemption, the bank withholds approximately €316.50 in taxes.

With proper instructions, only €52.75 would be due on the €200 above the €1,000 allowance. You can recover the difference through your tax return with the tax office.

Maximize your tax-free allowance for stocks

The stock tax-free allowance applies equally to dividends and capital gains. If you trade early in the year and place your tax exemption order in time, you prevent the bank from withholding amounts that must later be laboriously reclaimed.

Offsetting losses

Losses from capital investments can be offset against gains. To offset losses across multiple institutions, request a loss certificate from the bank by December 15.

This loss offsetting reduces your tax burden additionally because the tax office only applies the remaining net gain. If you miss the deadline, you can only carry losses forward within the respective institution.

When you need to deal with the tax office

The tax office treats capital gains from abroad differently. The German saver's allowance cannot be directly applied at foreign banks. You report this income in the form of Appendix KAP in your tax return.

Appendix KAP in the income tax return

If you did not place a tax exemption order or if taxes were paid abroad, you can recover overpaid amounts through Appendix KAP. The income tax return is the correct way to assert your claim with the tax office.

Favorable assessment and lower tax rates

If your personal tax rate is below 25 percent, a favorable assessment is worthwhile. You request it through Appendix KAP in line 4.

The tax office then checks whether your individual rate is lower than the flat-rate withholding tax on capital income and, if necessary, refunds any overpaid capital income tax.

For whom the favorable assessment is worthwhile

Particularly for those with low income, such as students or retirees, the favorable assessment can bring a clear advantage. The request costs nothing and can only work in your favor.

Non-assessment certificate (NV certificate) for low income

If your total taxable income falls below the basic personal allowance, a non-assessment certificate is worthwhile. The basic personal allowance is €11,784 in 2024 and rises to €12,348 in 2026.

With a non-assessment certificate, the bank does not withhold any capital income tax at all, even above the saver's allowance. The non-assessment certificate is therefore particularly worthwhile for investors with low other income.

How to apply for the NV certificate

You submit the application for a non-assessment certificate to your local tax office. You then present the certificate to your financial institution.

It typically applies for three years. Together with the saver's allowance and flat-rate miscellaneous expenses deduction, capital income up to approximately €12,820 remains completely tax-free. Those who use the non-assessment certificate save themselves the detour of later claiming a refund.

When the saver's allowance does not apply

Not all gains fall under the allowance. You should know these exceptions to the withholding tax discharge:

• Gains from the sale of real estate are subject to regular income tax
• Accounts in a business assets portfolio of business operators
• Tenant security deposit accounts, escrow accounts, and accounts of heir communities and associations
• Direct application to foreign capital income; a double taxation agreement may apply

These exceptions to the withholding tax discharge mean that taxation in individual cases deviates from the standard scheme. If in doubt, the relevant tax office will clarify which rule applies.

Practical tips for your allowance

In our view, structured planning pays off. These tips help you fully utilize the €1,000 exemption and avoid unnecessary tax withholding:

1. Act early: Place your tax exemption order at the beginning of the year or when opening an account.
2. Estimate income: Divide the €1,000 allowance according to expected capital income across banks.
3. Review annually: Regularly check the allocation of your tax exemption orders in online banking.
4. Keep a list: An overview of all placed instructions prevents you from exceeding the €1,000 limit.
5. Use children's accounts: Each child has their own €1,000 allowance.

Operating expenses are covered

Since 2009, actual operating expenses for capital income can no longer be deducted. Custody fees or advisory costs are covered on a flat-rate basis by the €1,000 saver's allowance. Deduction of actual expenses is excluded even with documentation.

Common withholding tax mistakes

Many investors waste money through avoidable mistakes. The most common is the forgotten tax exemption order.

Additionally, a total that is too high across all tax exemption orders causes the bank to reject the limit. Make sure your figures add up and do not exceed €1,000 or €2,000.

When tax advice is worthwhile

With multiple accounts, capital income from abroad, or larger assets, tax advice can be worthwhile. However, for most private investors, a clear overview of their tax exemption orders and Appendix KAP is sufficient, ideally noted briefly in a simple list.

Sound content for your investments

At aktie.com, we provide clear guides on taxes, stocks, funds, and ETFs. Those who know the 2024 saver's allowance and properly maintain their tax exemption orders fully benefit and only pay withholding tax where it truly applies.

This article provides in brief the fundamentals you need for an informed decision. You will find additional guides and in-depth content on tax allowances, church tax, and Appendix KAP as sources directly in our magazine. Every statement in this article is supported by the legal source in the German Income Tax Act.