Retirement
Deferred taxation: state pensions are taxed only in the payout phase, at the recipient's personal income-tax rate. The taxable share depends on the year the pension begins.
Pension taxation in Germany follows the principle of deferred taxation. This means that contributions in the saving phase remain largely tax-privileged, while the state pension is taxed only in the payout phase, at the recipient's personal income-tax rate.
How much of the pension is taxable depends on the year the pension begins. The taxable share rises gradually and reaches a full 100 per cent for a pension starting in 2058 or later. Those who retire earlier accordingly tax a smaller share; part of the pension then remains tax-free.
Whether tax is actually due in the end depends on the total taxable income in retirement and the applicable allowances. The rules described here reflect the position as of 2025 and concern the state pension; other forms of provision follow their own rules.
Related terms
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