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Can I deduct BU insurance premiums from my tax in Germany?

In short

Yes, you can deduct BU insurance premiums (Berufsunfähigkeitsversicherung) from your tax in Germany as a special expense, but it rarely has an effect. They share a cap of EUR 1,900 for employees and EUR 2,800 for the self employed with other policies, and health insurance usually fills it alone. BU cover inside a Basisrente pension works differently. This is not tax advice.

Can I deduct BU insurance premiums from my tax in Germany?

What it costs

Figures based on German law for 2026, without solidarity surcharge or church tax.

ExampleTypical range
Employee, EUR 45,000 gross, statutory health insurance, BU premium EUR 900 a yearEUR 0 tax saving
Cap for other provident expenses, employeesEUR 1,900 a year
Cap for other provident expenses, self employedEUR 2,800 a year
Own share of health insurance on EUR 45,000 gross (8.75 percent)about EUR 3,940 a year
BU for a 30 year old office worker, EUR 1,500 monthly benefitabout EUR 70 a month

Legal figures from the sources listed, as of November 2026.

The EUR 900 premium and the monthly price for the office worker are guide values from our quoting

practice.

Whether a deduction works in your case is calculated by the tax office; this is not tax advice.

Worked example

Employee with a stand alone BU policy

He earns EUR 45,000 gross, is in statutory health insurance and pays EUR 900 a year for his BU cover.

Own share of health insurance (8.75 percent)about EUR 3,940
Cap for other provident expensesEUR 1,900
Health insurance above the capyes, other insurance drops out
BU premium EUR 900no effect

His tax goes down by EUR 0. In return, a future BU pension is only taxed on its earnings share.

A stand alone BU policy as a special expense

If you take out and pay for disability insurance yourself, you can enter the premiums as a special expense under section 10 (1) no. 3a of the German Income Tax Act. The law names occupational and earning disability insurance there, together with liability, accident and term life insurance.

Section 10 (4) caps the whole pot at EUR 2,800 a year, and at EUR 1,900 if you receive a health insurance subsidy or are entitled to reimbursement of medical costs without your own contributions. Employees and civil servants with Beihilfe almost always end up at EUR 1,900. Couples filing jointly have both caps added.

Why the deduction almost always fizzles out

Basic health and long term care contributions take priority and are always deducted in full. If they exceed the cap, section 10 (4) sentence 4 excludes all other insurance, including BU.

Example: on EUR 45,000 gross in statutory health insurance you pay half of the general rate of 14.6 percent and half of the average additional rate of 2.9 percent. That is about EUR 3,940 for health insurance alone, before long term care. The cap of EUR 1,900 is exceeded twice over and your BU premium lowers your tax by EUR 0.

WhoCapDoes the BU premium help?
Employee, statutory health insuranceEUR 1,900almost never
Self employed, private health insuranceEUR 2,800rarely
Civil servant with BeihilfeEUR 1,900rarely
BU inside a Basisrentemaximum contribution to the miners' pension insuranceyes, as retirement provision

The other route: BU inside a Basisrente

Under section 10 (1) no. 2 (b) (bb) of the Income Tax Act, a Basisrente contract may include cover against occupational disability or reduced earning capacity. Among other conditions, it must pay a monthly lifelong annuity for an insured event that occurs before your 67th birthday. These premiums then count as retirement provision with a separate, much higher cap under section 10 (3): the maximum contribution to the miners' pension insurance.

It is a trade off, not a gift. Pensions from a Basisrente are taxed on a deferred basis with a high taxable share, while a stand alone policy is only taxed on its earnings share. And claims from a Basisrente must by law not be capitalisable, so there is no balance you can cash in if you need it.

Who actually needs to think about this

For most employees the answer is simple: a stand alone BU policy brings no tax benefit today, but its pension is taxed lightly if you claim. Choose the policy on its terms and benefit level.

A Basisrente is worth considering mainly if your tax rate is high now and you want to save for retirement anyway. If you only want to protect your income and stay flexible, a stand alone policy is usually the better fit.

Step by step

  1. Find the annual premium on your insurer's statement.
  2. Enter it under other provident expenses, the tax office applies the caps.
  3. Check whether your BU cover is a stand alone policy or part of a Basisrente.
  4. For a Basisrente, enter the premium under retirement provision.
  5. Do not choose a policy because of the tax effect.

Checklist

  • Premium statement from the insurer at hand
  • Clear whether stand alone policy or Basisrente
  • Health insurance contributions for the year known
  • For couples: both caps and both health policies considered
  • Later taxation of the pension part of the decision

Common mistakes

  • Treating the BU premium as if it lowered your tax in your budget
  • Choosing a Basisrente with BU only for the deduction and overlooking the later tax
  • Leaving the premium out in a year without own health contributions, when there would be room under the cap

Questions and answers

Frequently asked

Where do I enter BU premiums?

A stand alone BU policy goes under other provident expenses (Anlage Vorsorgeaufwand).

BU cover inside a Basisrente goes under retirement provision.

Why does my BU premium have no effect on my tax?

Because health and long term care contributions usually exceed the cap of EUR 1,900 or EUR 2,800

on their own.

Section 10 (4) sentence 4 then rules out the other insurance.

Is BU inside a Basisrente better for tax?

Better today, worse later.

The premiums are far more deductible, but the pension is taxed more heavily.

It makes sense mainly with a high tax rate and a real need for retirement savings.

Can I deduct BU as a business expense if I am self employed?

BU protects your own ability to work,

and the law places the premiums among special expenses in section 10.

Do not count on a business expense deduction.

Does filing jointly help?

Both caps are added, but so are both health policies.

In most cases nothing is left for BU.

Will I have to pay tax on a BU pension later?

Yes.

With a stand alone policy only on the earnings share, with a Basisrente on a much larger part.

Our page on taxing BU pensions explains the details.

Sources

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