If you're unable to work due to illness or other reasons, you may be entitled to income replacement benefits. This article explains what counts as such benefits, what doesn’t, how they affect your taxes, and where to enter them in the Taxfix app.
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These benefits temporarily replace lost income.
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They are tax-free but subject to progression tax.
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If you received more than €410 in one year, you're generally required to file a tax return.
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In the Taxfix app, enter them under "Income" → "Substitute Benefits".
🚀 Your Guide
What Are Income Replacement Benefits?
These benefits are meant to partially replace your salary. They must usually be applied for in advance. Common examples include:
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🧾 Unemployment Benefit I (Arbeitslosengeld I)
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⚙️ Short-Time Work Allowance (Kurzarbeitergeld)
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🏚️ Insolvency Pay (Insolvenzgeld)
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🤒 Sickness Benefit (Krankengeld)
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👶 Parental Allowance (Elterngeld)
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🤰 Maternity Pay (including employer subsidy)
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🔄 Transitional Allowance (Übergangsgeld)
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🏠 Maintenance Subsidy (Unterhaltsgeld)
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💼 Wage Subsidies (Zuschüsse zum Arbeitsentgelt)
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🔧 Reintegration Assistance (Eingliederungshilfe)
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🩺 Injury Benefit (Verletztengeld)
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🛡️ Compensation for Loss of Earnings under the Infection Protection Act
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🧑⚕️ Care Support Benefit (§ 44a para. 3 SGB XI, since 2015)
What Doesn’t Count as Income Replacement?
The following are not considered income replacement benefits:
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Unemployment Benefit II (Bürgergeld)
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Housing Benefit (Wohngeld)
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Child Benefit (Kindergeld)
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Social Welfare (Sozialhilfe)
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Strike Pay (Streikgeld)
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Daily sickness allowances from private insurance
These are treated differently for tax purposes.
How Do These Benefits Affect Your Taxes?
Income replacement benefits are tax-free but subject to the progression clause. This means:
➡️ They increase your tax rate on your other taxable income.
Example: You receive €10,000 in parental allowance and earn €20,000 in wages. The tax office calculates your tax rate as if you earned €30,000 but applies it only to the €20,000.
When Are You Required to File a Return?
If you received more than €410 in income replacement benefits in the tax year, you are required to file a tax return.
The filing deadline is typically July 31 of the following year.
How to Enter These Benefits in the Taxfix App
In the Taxfix app, go to the "Income" category:
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Select "Substitute Benefits".
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Choose the relevant benefit, e.g. Sickness Benefit or Unemployment Benefit I.
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You can enter multiple benefits one after the other.
If your benefit is not listed:
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Tap "Other" and enter the name manually.
✅ Important: Enter the gross amount, as stated on your benefit certificate (from your health insurance, employment agency, etc.).
💡 Tip: You don’t need to submit the certificate unless the tax office requests it.
🚀 Fill out the simple question-answer flow - we'll take care of the rest!
Still have questions?
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