When income stops due to illness, Krankengeld (sickness benefit) steps in as a wage replacement benefit. However, many people wonder how Krankengeld affects their Einkommensteuererklärung (income tax return) and why it is taken into account regarding pension insurance. Here you will find the most important information – simplified and easy to understand.
"Krankengeld: Tax-free, but relevant for progression"
Krankengeld is paid out as a net amount and is tax-free. However, it is subject to the Progressionsvorbehalt (progression clause). This means it increases the tax rate applied to your other income. Specifically: your sickness benefit itself is not taxed, but it can lead to a higher tax rate being applied to your regular income.
The health insurance provider reports all benefits directly or electronically to the Finanzamt in accordance with § 32b Abs. 3 Satz 1 EStG (Income Tax Act). For your income tax return, you will receive a certificate from your health insurance provider listing the gross sickness benefit for the respective period. You must enter these benefits in the main tax form (Mantelbogen) on page 2 under "Einkommensersatzleistungen" (wage replacement benefits). We are happy to assist you with this.
Why does the letter from the health insurance company differ from the actual payments?
The certificate from the health insurance company includes all benefits paid up until 10 January of the following year. This procedure follows the so-called Zufluss-Abfluss-Prinzip (inflow/outflow principle), whereby payments made in early January are still attributed to the previous year. This sometimes leads to discrepancies, which are nevertheless correct and comply with legal requirements. Furthermore, the figures provided are gross amounts. However, the Krankengeld paid into your bank account is a net amount.
Credits for Krankengeld periods towards the pension
While you receive Krankengeld, you remain compulsorily insured in the statutory pension insurance scheme. Your health insurance provider pays contributions to the pension insurance based on 80% of your previous gross earnings. These periods are recognised as compulsory contribution periods and have a positive effect on your pension entitlements.
Even if these contributions are lower than during regular employment, they close pension gaps and secure your pension entitlement. This ensures you remain socially protected even during a long period of illness.
!Icon Sonderausgaben
Basis of the calculation
Krankengeld amounts to 70% of your gross salary, but a maximum of 90% of your net salary. One-off payments such as holiday or Christmas bonuses are not taken into account for this base calculation.
Contribution deductions
Contributions for health, long-term care, and pension insurance are deducted from the Krankengeld. As a result, the actual amount paid out is often lower than the calculated sickness benefit.
Maximum limit of Krankengeld
Krankengeld is capped: it may not exceed the maximum rate of €116.38 per calendar day (2025). This limit is adjusted annually.
Calculation for variable incomes
For employees with fluctuating income, such as shift allowances, an average value from the last twelve months is determined. This ensures that the sickness benefit is fair and appropriate.
!Icon Werbungskosten
Calculation steps
Determine gross salary:
The basis is your average gross salary for the last 12 months before the start of the incapacity to work.
Calculate 70% of the gross:
Example: Gross salary €3,000 → 70% = €2,100
Compare with 90% of the net salary:
Example: Net salary €2,200 → 90% = €1,980
Select the lower value:
The Krankengeld is limited to the lower of the two values. In this case: €1,980.
→ Would you like to know exactly how much Krankengeld you will receive? Contact us. We will help you check your claims and consider potential tax consequences.
Progressionsvorbehalt (Progression Clause)
Income without Krankengeld
€40,000 → Average tax rate 20%
Income incl. Krankengeld
€40,000 + €5,000 Krankengeld → Calculation of a higher tax rate applied to the €40,000 base
Kinderkrankengeld: What parents should know
If a child falls ill and requires care, working parents are entitled to Kinderkrankengeld (child sickness benefit).
Who is entitled to Kinderkrankengeld?
Parents receive Kinderkrankengeld if they:
- are covered by statutory health insurance,
- are entitled to sickness benefit,
- must care for a child under 12 years of age (or older if the child has a disability),
- and no other caregiver is available.
The regulation also applies to single parents.
How much is Kinderkrankengeld?
Kinderkrankengeld amounts to 90% of the net salary. If you have received one-off payments such as holiday or Christmas bonuses in the last 12 months, the rate increases to 100% of the net salary.
💡 Maximum limit:
Kinderkrankengeld is capped and amounts to a maximum of €116.38 per calendar day (as of 2025).
How long is Kinderkrankengeld paid?
- Per parent: 30 days per year and child
- For single parents: 60 days per year and child
- With multiple children: Maximum 65 days per year (130 days for single parents)
This regulation was expanded during the Corona pandemic and may be adjusted in the future.
How do I apply for Kinderkrankengeld?
- Have a doctor issue a certificate regarding your child's illness.
- Submit the certificate to your health insurance provider.
- Inform your employer about the time off for childcare.
What deductions are there?
No contributions for health, long-term care, pension, or unemployment insurance are deducted from Kinderkrankengeld. However, like regular Krankengeld, it is tax-free but subject to the Progressionsvorbehalt.
Good to know
Kinderkrankengeld is paid regardless of whether you could work from home or not. It is designed to allow you to care for your child without suffering financial losses.
Deducting illness costs from tax alongside Krankengeld: How it works
If you have additional expenses due to illness, you can claim these in your income tax return under certain conditions. This becomes particularly important if you receive Krankengeld and face additional financial burdens from medication, doctor visits, or medical aids.
What are medical expenses?
Medical expenses (Krankheitskosten) include all costs incurred due to medical necessity. These include:
- Medication: Only tax-deductible with a medical prescription.
- Travel costs: For trips to the doctor, hospital, or therapy (€0.30 per kilometre).
- Medical aids: Glasses, hearing aids, prostheses, wheelchairs, provided they are medically prescribed.
- Treatments: Physiotherapy, massages, health spa treatments (Kuren), or psychotherapeutic sessions.
- Hospital costs: Co-payments for hospital stays or outpatient surgeries.
Requirement: Extraordinary burdens
Medical expenses can be claimed in your tax return as außergewöhnliche Belastungen (extraordinary burdens) under § 33 EStG. The following rules apply:
- The costs must be unavoidable (e.g., due to medical orders).
- They must not be reimbursed by the health insurance company or other bodies.
- Your expenses must exceed the zumutbare Eigenbelastung (reasonable individual burden).
What is the reasonable individual burden?
The reasonable individual burden depends on your income, marital status, and the number of children you have. it ranges between 1% and 7% of your total annual income. Only the medical costs exceeding this limit can be deducted.
💡 Example:
Income: €40,000
Reasonable individual burden (4%): €1,600
Medical costs: €2,500
Deductible: €2,500 – €1,600 = €900
How do you prove the costs?
For the Finanzamt, you will need:
- Receipts and invoices (e.g., for medication and aids)
- Medical prescriptions or certificates
- Evidence of travel costs (e.g., fuel receipts or a logbook)
- Statements from the health insurance company regarding non-reimbursed costs
Tip: Correctly reporting travel costs
For trips to doctors, therapists, or clinics, you can claim €0.30 per kilometre (round trip) as an extraordinary burden. Keep a logbook or note the date, destination, and purpose of the trip.
Which costs are not recognised?
Expenses that are not medically necessary cannot be deducted, e.g.:
- Wellness treatments or cosmetic procedures
- Nutritional supplements without a medical prescription
- Costs for purely preventive check-ups
Lexo.Tax supports you with:
- checking your documents,
- correctly entering medical costs in your tax return,
- optimising your tax burden.
Lexo.Tax supports you with your income tax return
The tax treatment of Krankengeld often raises questions. Lexo.Tax e.V. helps you keep track. We check your certificates, enter all wage replacement benefits correctly into the tax return, and optimise your tax burden – fast, easy, stress-free.
💡 Advantages with Lexo.Tax:
- Personal and digital advice
- Support for all questions regarding wage replacement benefits
- Simple processing of your tax return
Join now and complete your tax return worry-free!
Note
This article serves as general information and was carefully created by the Lexo.Tax editorial team. Personal tax advice can only be provided within the framework of a membership with Lexo.Tax – and exclusively within the legally permissible scope according to § 4 Nr. 11 StBerG (Tax Consultancy Act).
Frequently Asked Questions (FAQ)
Why is Krankengeld tax-free but subject to the progression clause?
!Expand
Krankengeld is tax-free but is taken into account via the progression clause (Progressionsvorbehalt). As a result, your personal tax rate for other income may increase. This regulation ensures an even tax burden across all types of income.
How and where do I enter Krankengeld in the tax return?
!Expand
Krankengeld is specified in the main tax form (Mantelbogen) of the tax return on page 2 under "Einkommensersatzleistungen". Use the certificate from your health insurance provider as proof.
Why is Krankengeld credited to the pension insurance?
!Expand
While you receive Krankengeld, your health insurance provider pays pension insurance contributions based on 80% of your gross salary. These periods secure your pension entitlement and prevent gaps in coverage.
What does the inflow/outflow principle mean for Krankengeld?
!Expand
All payments made by 10 January of the following year are attributed to the previous year. This regulation avoids tax inaccuracies caused by delayed payments.
Does Lexo.Tax provide support for tax returns involving Krankengeld?
!Expand
Yes, our team checks your documents, enters wage replacement benefits correctly, and optimises your tax return. With Lexo.Tax, you save time and avoid mistakes.