🧾 Pension and taxes: taxable share, basic allowance, tax return

Pensions are taxable, but not at 100 percent. If you retire in 2026, you are taxed on 84 percent. Many people still pay no tax.

taxation of pensions taxable share pension tax-free allowance basic allowance tax return pension payment notification deferred taxation cohort principle

In brief

Your pension is taxed according to the year your pension starts (cohort principle). If you retire in 2026, you must pay tax on 84 percent of the pension. 16 percent remain tax-free as a pension tax-free allowance (Rentenfreibetrag), permanently. Each year the share for new pensioners rises by 0.5 percentage points. From 2058 it is 100 percent.

Tax is due only when your taxable income is above the basic allowance (Grundfreibetrag): 12,348 euros in 2026 (single people).

The pension insurance reports your pension to the Finanzamt. But that does not replace a tax return if you are obliged to file one.

Step by step

Note the year your pension startsIt determines your taxable share.
Estimate your annual incomePension (taxable share) plus other income, for example rental income or occupational pension.
Check whether a tax return is necessaryIf your income is above the basic allowance, you generally have to file.
Get helpAsk the Finanzamt or a wage tax assistance association (Lohnsteuerhilfe) if you are unsure.

Deadlines

84 %

Taxable share for pensions starting in 2026 (16 % pension tax-free allowance)§ 22 EStG; DRV announcement of 16 February 2026

€12,348

Basic allowance 2026 (single people)§ 32a EStG

2058

Taxable share reaches 100 %§ 22 EStG; DRV-Meldung

Watch out – common mistakes

What matters for the duty to file a tax return is not the gross pension but the taxable part plus other income, minus deductible amounts (special expenses and the like: not checked against the full text).
According to the DRV, the pension tax-free allowance is determined from the first full annual gross pension and then remains a fixed euro amount (secondary sources; wording of § 22 EStG not checked against the full text).
Filing deadlines for the tax return were not checked against the full text. Ask the Finanzamt or use ELSTER.
Pensions from abroad and double taxation agreements were not checked.

In depth · legal basis, figures and practice – for advisers and professionals

Taxable share, § 22 Nr. 1 Satz 3 Buchst. a Doppelbuchst. aa EStG

The taxable share depends on the year the pension starts. For pensions that started in 2025 it is 83.5 percent. According to the announcement of the Deutsche Rentenversicherung of 16 February 2026, for a pension starting in 2026: 84 percent, 16 percent remain tax-free. The share rises by 0.5 percentage points per year; for a pension starting in 2058, 100 percent applies. Existing pensioners are not affected; their allowance remains unchanged. This applies to old-age, reduced earning capacity and survivors' pensions.

Basic allowance, § 32a EStG

2026: 12,348 euros; above that, progression formulas (12,349–17,799 €, 17,800–69,878 €, 69,879–277,825 € at 42 %, from 277,826 € 45 %). For married couples filing jointly, the splitting procedure applies (basic allowance doubled: 24,696 €, according to a secondary source).

Pension payment notification

The pension insurance transmits pension amounts to the tax administration. According to a DRV note, this does not release you from the duty to file a tax return.

Not checked against the full text

Legal basis of the duty to file a tax return (§ 25 EStG, § 56 EStDV), filing deadline, health insurance contributions as special expenses, lump sum for income-related expenses, interaction with the Aktivrente.

Who is responsible

Finanzamt (tax office)
Deutsche Rentenversicherung (pension payment notification, brochure "Versicherte und Rentner: Informationen zum Steuerrecht")
Wage tax assistance associations (Lohnsteuerhilfevereine) and tax advisers (offer and costs: not checked)

Quick questions

Worum geht es bei „Pension and taxes: taxable share, basic allowance, tax return“?

Pensions are taxable, but not at 100 percent. If you retire in 2026, you are taxed on 84 percent. Many people still pay no tax.

Which deadlines and figures matter?

84 %: Taxable share for pensions starting in 2026 (16 % pension tax-free allowance) (§ 22 EStG; DRV announcement of 16 February 2026)
€12,348: Basic allowance 2026 (single people) (§ 32a EStG)
2058: Taxable share reaches 100 % (§ 22 EStG; DRV-Meldung)

What should I do first?

Note the year your pension starts: It determines your taxable share.
Estimate your annual income: Pension (taxable share) plus other income, for example rental income or occupational pension.
Check whether a tax return is necessary: If your income is above the basic allowance, you generally have to file.

What do I need to watch out for?

What matters for the duty to file a tax return is not the gross pension but the taxable part plus other income, minus deductible amounts (special expenses and the like: not checked against the full text).
According to the DRV, the pension tax-free allowance is determined from the first full annual gross pension and then remains a fixed euro amount (secondary sources; wording of § 22 EStG not checked against the full text).
Filing deadlines for the tax return were not checked against the full text. Ask the Finanzamt or use ELSTER.

Evidence

§ 32a EStG, gesetze-im-internet.de, retrieved 21 September 2026
§ 22 EStG, gesetze-im-internet.de, retrieved 21 September 2026
Deutsche Rentenversicherung, Steueranteil für Neu-Rentner liegt 2026 bei 84 Prozent (announcement of 16 February 2026), retrieved 21 September 2026
Search-result summaries on the duty to file a tax return (secondary sources, full text not retrieved), retrieved 21 September 2026

As of

September 2026 · Sources and method

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