Savers' Exemption 2024: How to Optimize Your Tax-Free Allowance for Stocks

The savers' exemption 2024 stands at 1,000 euros per person and 2,000 euros for married couples filing jointly. Up to this limit of 1,000 euros, capital gains such as interest, dividends, and gains from sales remain tax-free. Only above this amount is the withholding tax of 25 percent plus solidarity surcharge applied.

With an exemption order from your bank, you avoid unnecessary tax withholding from the start. This way, more of your returns remain with you instead of flowing to the bank in advance.

What the savers' exemption exactly means

The savers' exemption, colloquially also called the savers' tax allowance, is a statutory tax-free allowance for income from capital assets. The legal basis is found in Section 20, Subsection 9 of the German Income Tax Act.

Up to the amount of this allowance, your capital income remains free from tax withholding. The savers' exemption also covers, on a flat-rate basis, the business expenses associated with securities.

Which income falls under the allowance

This covers 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 offset against the allowance of 1,000 euros.

Amount of the savers' exemption 2024 at a glance

These amounts have been in effect since January 1, 2023 and remained unchanged for 2024. The federal government also plans no adjustments for 2025 and 2026. Specifically, the rule is as follows:

• Single persons: 1,000 euros per year
• Married couples and civil partners filing jointly: 2,000 euros per year
• Children: each child has their own savers' exemption of 1,000 euros

The increase from 2023

Before 2023, the allowance was 801 euros for individuals and 1,602 euros for couples. Through the 2022 Annual Tax Act, the savers' exemption increased from 801 euros to 1,000 euros and from 1,602 euros to 2,000 euros respectively.

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

Withholding Tax: What applies above the savers' exemption 2024

If your capital gains exceed the savers' exemption, withholding tax applies. It amounts to 25 percent on the exceeding portion. In addition, there is the solidarity surcharge and, where applicable, church tax.

Total tax burden in detail

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

With a tax burden of 26.375 percent, properly using the tax-free allowance makes a noticeable difference to your returns. Withholding tax generally has a conclusive effect, meaning the capital gains tax is settled through source withholding.

Those paying church tax reach a total tax 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 exemption order as a central instrument

An 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 the full capital gains tax, even if your income is below the 1,000 euro allowance.

How to issue the order

You can issue the order online, via app, or at a branch. With many institutions, you can complete the instruction in your online banking in just a few minutes.

You must provide your tax identification number. Once issued, an exemption order is valid indefinitely and automatically renews. Another requirement is that the total of all orders does not exceed your personal maximum amount.

Change and revocation

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

Save capital gains tax with multiple accounts

If you have accounts and securities accounts with multiple institutions, you must split the 1,000 euro allowance. The sum of all exemption orders must not exceed the maximum of 1,000 euros or 2,000 euros. Incorrect division costs real money.

Those who plan carefully here can strategically save capital gains tax without having to recover anything from the tax office later.

Example of a sensible allocation

If you expect 600 euros in interest and dividends at your savings bank and 400 euros at another provider, distribute the allowance accordingly: 600 euros to the savings bank, 400 euros to the other bank. This way, you use the full sum of 1,000 euros and avoid tax withholding.

What happens without an exemption order

A forgotten exemption order becomes expensive. With 1,200 euros in capital gains without exemption, the bank withholds approximately 316.50 euros in taxes.

With the correct instruction, only 52.75 euros would be due on the 200 euros above the 1,000 euro allowance. You recover the difference through your tax return from the tax office.

Fully utilize the tax-free allowance for stocks

The tax-free allowance for stocks applies to dividends and capital gains equally. Those who trade early in the year and issue the exemption order in time prevent the bank from withholding amounts that must be painfully reclaimed later.

Offsetting losses

Losses from capital investments can be offset against gains. For loss carryover across multiple institutions, request a loss certificate from your bank by December 15.

This loss offset reduces your tax burden additionally because the tax office only applies the remaining net gain. Those who miss the deadline can only carry forward losses within the respective institution.

When you need to deal with the tax office

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

Schedule KAP in the income tax return

If you have not issued an exemption order or if withholdings occurred abroad, you recover overpaid amounts through Schedule KAP. Your income tax return is the right way to assert your claim with the tax office.

Favorable assessment and lower tax rate

If your personal tax rate is below 25 percent, a favorable assessment is worthwhile. You request it via Schedule KAP on line 4.

The tax office then checks whether your individual rate is more favorable than the standard withholding tax and reimburses any overpaid capital gains tax if applicable.

Who benefits from a favorable assessment

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

Non-assessment certificate for low income

If your total taxable income is below the basic exemption, a non-assessment certificate is worthwhile. The basic exemption is 11,784 euros in 2024 and increases to 12,348 euros in 2026.

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

How to apply for the non-assessment certificate

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

It typically applies for three years. Combined with the savers' exemption and the miscellaneous expenses allowance, capital gains of up to approximately 12,820 euros remain completely tax-free. Those using the non-assessment certificate avoid the detour through later reimbursement.

When the savers' exemption does not apply

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

• Gains from the sale of real estate are subject to regular income tax
• Accounts in business assets of sole proprietors
• Deposit accounts, trust accounts, and accounts of heirs' associations and associations
• Direct application to foreign capital gains; a double taxation agreement may apply here

These exceptions to the withholding tax rule mean that taxation may deviate from the standard scheme in individual cases. In case of doubt, the competent tax office clarifies which rule applies.

Practical tips for your tax allowance

From our perspective, structured approach pays off. These tips help you fully utilize the 1,000 euro exemption and avoid unnecessary tax withholding:

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

Business expenses are covered

Since 2009, actual business expenses for capital gains can no longer be deducted. Custody fees or advisory costs are covered on a flat-rate basis by the 1,000 euro savers' exemption. Deduction of actual expenses is excluded even with supporting documentation.

Common mistakes in tax withholding

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

Additionally, a sum that is too high across all exemption orders causes the bank to reject the limit. Make sure the values add up correctly and do not exceed 1,000 euros or 2,000 euros.

When tax advice is worthwhile

With multiple accounts, capital gains from abroad, or larger assets, tax advice can be worthwhile. For most individual investors, however, a clear overview of their exemption orders and Schedule KAP is sufficient, preferably noted briefly in a simple list.

Well-founded content for your investment

At aktie.com, we bundle understandable guides on taxes, stocks, funds, and ETFs. Those who know the savers' exemption 2024 and maintain their exemption orders properly will fully benefit and only pay withholding tax where it actually applies.

This article briefly provides the basics you need for an informed decision. You can find additional guides and in-depth information on tax-free allowances, church tax, and Schedule KAP as a source directly in our magazine. Every statement in this article is supported by the legal source in the German Income Tax Act.