Grundfreibetrag 2026: Germany's Basic Tax-Free Allowance Explained

The Grundfreibetrag is the part of your income that stays completely tax-free. In 2026 it is EUR 12,348 for singles and EUR 24,696 for jointly assessed married couples. Income tax only applies to every euro above that. For the self-employed the basic allowance matters even more, because — unlike employees — no wage tax is withheld for them, so they have to keep track of their own tax burden.

Key facts at a glance

• Grundfreibetrag 2026: EUR 12,348 for individual assessment, EUR 24,696 for jointly assessed married couples (§ 32a EStG).
• What it means: No income tax applies up to this taxable income. Only the euro above it is taxed.
• No application needed: The basic allowance is built into the income tax tariff — the tax office deducts it automatically.
• Applies to everyone: Employees, the self-employed, freelancers, pensioners. The type of income does not matter.
• Rises every year: In 2025 it was EUR 12,096, in 2024 EUR 11,784. The increase offsets inflation and "cold progression".
• Crucial for the self-employed: If your expected profit is below the basic allowance, the tax office usually sets no estimated tax prepayment.

What is the Grundfreibetrag?

The Grundfreibetrag (basic tax-free allowance) is a statutory amount up to which your taxable income stays free of income tax. It is set out in § 32a of the German Income Tax Act (EStG) and forms the bottom step of the income tax tariff. If you earn less than the basic allowance in a year, you pay no income tax on that income.

The reason behind it is the constitutionally protected subsistence minimum (Existenzminimum): the state may not tax the part of income a person absolutely needs to live — for housing, food, clothing and health. Germany's Federal Constitutional Court has repeatedly confirmed that this minimum must stay tax-free. That is exactly what the Grundfreibetrag does.

Important: the basic allowance is not an amount you apply for separately or get "paid out". It is already factored into the tax tariff. For employees the employer accounts for it automatically through the tax class when withholding wage tax; for the self-employed it flows into the calculation of income tax and prepayments.

Grundfreibetrag 2026: the current amount

For 2026 the basic allowance was raised by EUR 252 compared with the previous year:

Under joint assessment each partner is entitled to the full basic allowance — which is why the amount is exactly double. This is one reason joint assessment is often worthwhile for couples with unequal incomes: if one partner earns little or nothing, their unused basic allowance can relieve the other (spousal splitting, Ehegattensplitting).

How the Grundfreibetrag has developed

The basic allowance is raised almost every year so that inflation does not effectively push more and more people into paying tax on their subsistence minimum. The development of recent years (individual assessment in each case):

From 2021 to 2026 alone, the basic allowance has therefore risen by more than EUR 2,600. The increases are based on the federal government's regular subsistence-minimum report, from which the tax-free minimum is derived.

How the Grundfreibetrag works in the tax tariff

The basic allowance is the first "zone" of the progressive income tax tariff. Simplified, the 2026 tariff looks like this:

• Up to EUR 12,348 taxable income: 0% — no income tax.
• From EUR 12,349: the entry tax rate starts at 14% and rises with every further euro (progression zone).
• From EUR 69,879: the top tax rate of 42% applies.
• From EUR 277,826: the so-called "wealth tax" (Reichensteuer) kicks in at 45%.

The key point: the Grundfreibetrag does not only help low earners. Every taxpayer benefits from the tax-free first EUR 12,348, no matter how high their total income. Only the part of income above the basic allowance is taxed at all — and even that in steps, not immediately at the top rate.

A common misconception: crossing a particular threshold does not suddenly mean you pay more tax on your entire income. The higher rate always applies only to the portion of income above the relevant threshold (marginal tax rate). How this affects your quarterly payments is explained in our article on estimated tax payments for the self-employed.

Grundfreibetrag for the self-employed: what is different

For employees the basic allowance is invisible — it sits inside the tax class and is accounted for when wage tax is withheld. The self-employed and freelancers, by contrast, have to calculate their income tax themselves, because nobody withholds it automatically. Three points matter here:

• No prepayment below the allowance: if your expected taxable income is below EUR 12,348, no income tax applies — so the tax office usually sets no prepayment either.
• Profit ≠ revenue: what counts is not your revenue but your profit after deducting business expenses (e.g. from the EÜR cash-basis accounts). Only from this profit are special expenses and allowances deducted until the taxable income is determined.
• Self-employed on the side? If you are employed and self-employed, your basic allowance is usually already "used up" by your salary. Your self-employed profit is then effectively taxed at your personal rate from the first euro. More on this in Self-employed and employed: paying tax correctly.

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The Grundfreibetrag and other allowances

The basic allowance is not the only amount that lowers your taxable income. It takes effect after other deductions have already been accounted for:

• Business expenses reduce the self-employed person's profit before the basic allowance even comes into play.
• Saver's allowance (Sparerpauschbetrag): EUR 1,000 per person (EUR 2,000 under joint assessment) of investment income stays tax-free — on top of the basic allowance.
• Special expenses and provision contributions (e.g. health and pension insurance) reduce taxable income further.
• Child allowance (Kinderfreibetrag): parents get either child benefit (Kindergeld) or — if more favourable — the child allowance. The tax office checks this automatically (Günstigerprüfung).

Important to understand: the Grundfreibetrag and these allowances add up. They are not alternatives to each other — they are deducted from income one after another.

Worked example

Suppose you are self-employed and make a profit of EUR 30,000 in 2026. After deducting provision contributions and special expenses, a taxable income of EUR 26,000 remains. Here is how the basic allowance works:

Only the EUR 13,652 above the basic allowance is subject to income tax at all — and even that in steps under the progressive tariff, starting at 14%. The assessed income tax in this example is around EUR 2,800. Without the basic allowance, the tax would be considerably higher.

Expert opinion

Many self-employed people think about tax in terms of their revenue — but in the end only the taxable income after all deductions counts. The basic allowance is your floor: the first roughly EUR 12,000 always stays tax-free. If you plan with that in mind, you don't set aside too much and keep more liquidity in the business.

Keep track of your tax burden with Norman

The basic allowance is just one building block of your tax calculation. How much you actually pay at year-end depends on profit, special expenses and the progressive tariff — and that shifts with every invoice and every receipt. With Norman you don't have to keep it all in your head:

• Live tax calculation: Norman calculates your estimated income tax in real time — the basic allowance and progressive tariff are already factored in.
• Reserves overview: you always see how much to set aside for tax, instead of guessing with rough rules of thumb.
• No surprises: as your profit rises above the basic allowance, you immediately see from when and how much tax applies.

Frequently asked questions about the Grundfreibetrag

How much is the Grundfreibetrag in 2026?

In 2026 the basic allowance is EUR 12,348 for singles and EUR 24,696 for jointly assessed married couples. No income tax applies up to this taxable income.

Do I have to apply for the Grundfreibetrag?

No. The basic allowance is built into the income tax tariff and is accounted for automatically by the tax office — both at assessment and when setting prepayments.

Does the Grundfreibetrag apply to the self-employed too?

Yes. The basic allowance applies regardless of the type of income to all taxpayers — including the self-employed, freelancers and traders. What counts is your taxable income after deducting business expenses.

What is the difference between the Grundfreibetrag and a tax-free allowance?

"Tax-free allowance" (Steuerfreibetrag) is an umbrella term for all amounts that reduce your taxable income — such as the saver's allowance or the child allowance. The Grundfreibetrag is the most important one, and the only one that every taxpayer is entitled to automatically and without conditions.

What happens if I earn exactly the Grundfreibetrag?

If your taxable income is exactly at or below the basic allowance, you pay no income tax. It can still make sense to file a tax return — for example to get back overpaid prepayments or capital gains tax.

Is the Grundfreibetrag doubled for married couples?

Under joint assessment each spouse is entitled to the full basic allowance, EUR 24,696 together (2026). Through spousal splitting, an unused basic allowance of one partner can relieve the other.

Conclusion

The Grundfreibetrag is the floor of every income tax calculation: EUR 12,348 (singles) and EUR 24,696 (married couples) stay completely tax-free in 2026. You don't have to apply for it — the tax office deducts it automatically. For the self-employed it is especially relevant, because they have to calculate their own tax and size their reserves accordingly.

Alongside the basic allowance, keep an eye on your ongoing estimated tax payments — and as a parent, check whether child benefit or the child allowance is more worthwhile for you.