Taxing a bonus in Germany: December or January, and what an investment deduction changes

For many employees in leadership and sales roles, the bonus makes up a large part of annual income. It arrives once a year, often in December or with a payroll run in spring. On the payslip it then looks like surprisingly little net. For the managing director of their own limited company (GmbH), the same payment is called a Tantieme and follows its own receipt rules.

The questions are the same every year: can the bonus be pushed into next year? Is the wage tax on it final? Does it cost social security contributions? What does an investment deduction (Investitionsabzugsbetrag, IAB) under § 7g EStG achieve in that year? The answers draw on our own calculation for five income situations.

When is a bonus taxed, in December or in January?

In the year you receive it. A bonus is not paid continuously; for wage tax purposes it is therefore a one-off payment, just like a Tantieme, a gratuity, a 13th month's salary or a one-time Christmas bonus (R 39b.2 (2) LStR). For one-off payments only the year of receipt counts (§ 38a (1) sentence 3 EStG, applied to income tax via § 11 (1) sentence 4 EStG). The year the bonus is meant for is irrelevant: a bonus for 2026 paid in March 2027 is 2027 income.

Regular salary is different. December's salary still belongs to the old year if it is transferred within the first three weeks of January (R 39b.2 (1) no. 7 LStR). That leeway does not exist for a bonus. A bonus credited on 30 December counts for December; one that arrives on 2 January counts for the new year.

Anyone who wants to influence the date needs the employer. The payment date is usually set by the bonus agreement or by payroll; a deferral has to be agreed before the bonus falls due. How this holds up legally for a severance payment and what to watch in the wording is covered in deferring a severance payment to the following year; the receipt rule for a bonus is the same.

Does it pay to defer the bonus to January?

Rarely. Pushing the bonus into January taxes it one year later; in the following year it then sits on top of that year's income, often together with the next bonus. Only someone who earns clearly less in the following year comes out ahead. The table therefore compares the tax of both years combined.

Three patterns emerge. If both years sit in the 42 percent band, the bonus costs the same in either year: 17,935 euros of tax on 40,000 euros in the sample case, 44.8 percent. The 211 euros in the first case only arise because in the January variant the solidarity surcharge for 2026 still sits in its phase-in zone. Even half a salary in the following year only brings 644 euros at 110,000 euros, because 55,000 euros of salary plus a 40,000 euro bonus again land mostly in the 42 percent band.

Below the 42 percent band the picture turns. At a 60,000 euro salary, the bonus lifts income into the progressive zone; pushed into the following year, it meets the next bonus there. Together the two cost more than separately. Only a real income gap in the following year, such as half a year of sabbatical, turns this into an advantage of just over 10 percent of the bonus. Parental leave in the following year is a special case, because parental allowance is subject to the progression clause; see parental allowance and direct investment.

Does the fifth rule apply to a bonus?

Not to the annual bonus. § 34 (2) no. 4 EStG grants reduced taxation (Fünftelregelung) to remuneration for work spanning several years, meaning at least two assessment periods and more than twelve months. A regularly paid, profit-linked Tantieme whose amount is only known after the financial year ends is not such remuneration (H 34.4 EStH with Federal Fiscal Court of 30.08.1966, VI 211/65). The same applies to the usual annual bonus.

It is different when pay for several years comes together in one year: Tantiemen for several years in one amount (Federal Fiscal Court of 11.06.1970, VI R 338/67), overtime covering more than twelve months paid in one sum (Federal Fiscal Court of 02.12.2021, VI R 23/19) or a bonus from a multi-year plan with a single payout date. The bunching must rest on economically sensible reasons (R 34.4 (1) sentence 3 EStR). Since 2025 the employer no longer applies the fifth rule in payroll; it only comes through the tax return.

Why does the wage tax on the bonus differ from the tax assessment?

Because the employer only knows your wages. For a one-off payment, payroll calculates the annual wage tax on the expected annual wage once without and once with the bonus and withholds the difference (§ 39b (3) EStG). Future one-off payments of the year are left out (R 39b.6 (2) sentence 4 LStR). Because the whole difference is deducted at once, the bonus looks worse on the payslip than the salary; it is still taxed at the same rates.

Differences from the assessment arise as soon as there is more than this one wage: work expenses, other income, losses, tax classes III and V or an IAB. One point is almost never mentioned. On the wage tax of a one-off payment, the full 5.5 percent solidarity surcharge is levied as soon as annual wage tax including the bonus exceeds the 20,350 euro threshold (§ 3 (4a) and § 4 sentence 4 SolZG). In the assessment, by contrast, the phase-in zone applies, in which each additional euro of income tax costs 11.9 cents of surcharge (§ 4 sentence 2 SolZG). Anyone whom the bonus carries into this zone therefore has too little surcharge withheld.

These are not large sums, but they explain why an additional payment sometimes follows a bonus year even though the employer did everything right. Anyone expecting an IAB or other losses files a return anyway; both are settled there. For later years, plannable negative income from a business can also be entered as an allowance in payroll (§ 39a (1) sentence 1 no. 5 (b) EStG), as described in saving tax as an employee.

Does the bonus cost social security contributions? Does January change that?

Only up to the contribution ceiling; January usually changes nothing. A one-off payment is subject to contributions to the extent that earnings so far in the year have not reached the pro-rata ceiling (§ 23a (3) SGB IV). In 2026 the ceilings are 69,750 euros for health and long-term care insurance and 101,400 euros for pension and unemployment insurance. Anyone whose salary is already above them pays no contributions on the bonus.

A January bonus would meet an almost empty ceiling in the new year, since only one twelfth counts pro rata. That is why the March rule (Märzklausel) exists: a one-off payment between 1 January and 31 March is assigned to December of the previous year if, together with the new year's earnings, it exceeds the pro-rata ceiling (§ 23a (4) SGB IV). For people compulsorily insured in statutory health insurance, only the health insurance ceiling counts (para. 5).

When is a shareholder-managing director's Tantieme received?

For a controlling shareholder, as soon as it falls due, even without payment. Employed managing directors without a significant stake are treated like any other bonus recipient: receipt on payment. Whoever controls the GmbH, for example as sole or majority shareholder, can have a due and undisputed claim paid out at will. The Federal Fiscal Court therefore treats the Tantieme as received once it falls due (judgment of 05.06.2024, VI R 20/22, headnote 1).

It falls due when the annual accounts are adopted, unless the service contract sets a different date that is valid under civil law and at arm's length (headnote 2). The law limits the adoption date: shareholders must decide within the first eight months of the following financial year, for a small GmbH within eleven months (§ 42a (2) GmbHG). With the financial year equal to the calendar year, the Tantieme for 2025 is therefore normally received during 2026; for a small GmbH adopting its accounts on time, by the end of November at the latest. The Tantieme discussed in December 2026 is usually the one for 2026. It is only received in 2027.

Three details from case law:

• A Tantieme not shown as a liability in the adopted annual accounts is not received, even if it should have been shown there (VI R 20/22, headnote 3). The tax administration gave up its contrary view in a letter of 11.05.2026 and revoked the Federal Ministry of Finance letter of 12.05.2014.
• If the shareholder waives a Tantieme that has already arisen, this can be a hidden contribution; the recoverable part then still counts as received (VI R 20/22, para. 13). Not having it paid out is therefore no way to avoid the tax.
• If the shareholders' meeting adopts the accounts late, this does not automatically bring receipt forward to the statutory date (Federal Fiscal Court of 28.04.2020, VI R 44/17). Whether a deliberate delay counts as abuse under § 42 AO the court expressly left open (para. 40).

A shareholder-managing director who wants to steer the timing does so through the service contract and in advance, not through the transfer date. Every Tantieme agreement must also pass an arm's length test; otherwise it becomes a hidden profit distribution. How salary, Tantieme and dividends compare is covered in saving tax as a business owner.

What does an investment deduction bring in the bonus year?

Around 42 to 46 cents per euro of deduction in typical bonus situations. The IAB is a deduction from the profit of your own business for a planned investment, up to 50 percent of the expected acquisition cost (§ 7g (1) EStG). With an energy direct investment, this business comes into being with the investment. The resulting loss is offset against salary in the same year; bonus and Tantieme count in full. The 200,000 euro profit limit refers to the business, not to the salary.

At a 110,000 euro salary the deduction is even worth slightly more in the year without a bonus. The reason is again the solidarity surcharge: without a bonus the deduction runs through the phase-in zone, where each euro is particularly expensive. Anyone already well inside the 42 percent band does not need to place the IAB in the bonus year. At a 60,000 euro salary it is the other way round: without a bonus the same deduction saves only 31 cents per euro, with a bonus 42 cents. An IAB of 30,000 euros there offsets the entire tax on the bonus, 13,076 euros in the sample case. RSU taxation in the vesting year shows the same pattern for share-based pay.

The deduction only takes effect with the tax return; the wage tax already withheld then comes back. Which conditions apply to the business and in which time window deduction and investment have to fit together is covered in the requirements of the IAB and IAB deadlines and time windows.

Can the bonus be tax-free in 2026?

Only within limits, through a company pension. There is no tax-free bonus for 2026. The inflation compensation bonus was limited to payments up to 31.12.2024 (§ 3 no. 11c EStG). The Bundestag passed the planned relief bonus (Entlastungsprämie) of up to 1,000 euros in April 2026; the Bundesrat refused its consent on 8 May 2026. The federal government has not pursued it since.

That leaves deferred compensation (Entgeltumwandlung). Contributions to a direct insurance, pension fund or Pensionskasse are tax-free up to 8 percent of the pension insurance contribution ceiling (§ 3 no. 63 EStG), so up to 8,112 euros in 2026; 4 percent of that, 4,056 euros, is free of contributions (§ 1 (1) sentence 1 no. 9 SvEV). One-off payments that have been earned but are not yet due may also be converted (Federal Ministry of Finance letter on company pensions, para. 12). The price: the money is locked up until retirement, the later benefit is fully taxable (§ 22 no. 5 EStG) and the amount is capped. Of a 40,000 euro bonus, deferred compensation covers about one fifth, less if part of the salary is already being converted.

What speaks against deferral and the IAB?

Six points that belong in every decision:

• A deferred bonus is a claim against the employer until it is paid. Anyone who resigns, or whose employer runs into difficulties, bears that risk for a tax effect that is often below one percent of the bonus.
• The IAB defers tax, it does not waive it. The tax returns through the add-back at investment and the lower depreciation; if no investment is made, the deduction is reversed retroactively with interest.
• Liquidity. A good half of a bonus remains net; a direct investment ties up equity for many years. The tax saving only arrives with the assessment.
• A business of your own. The direct investment is a commercial business with its own profit calculation and filing duties. Day-to-day management can be outsourced, responsibility cannot.
• § 15b EStG. If a direct investment is subscribed as a pre-packaged product whose prospectus puts the tax saving at the centre, the loss can be blocked as a tax deferral model; see The loss created by an investment deduction (IAB): offsetting it against salary, carrying it back and carrying it forward.
• The risk of the asset. Yield, power prices, technology and counterparties determine the result; a total loss of the capital invested is possible.

Which questions should you settle before the bonus arrives?

• When exactly is the bonus paid: with the December payroll or later? Is the date in the bonus agreement? Will the employer allow a change?
• How high is next year's income? Is there a bonus of its own? Is a job change, sabbatical, parental leave or retirement coming up?
• Do salary and bonus put you in the solidarity surcharge phase-in zone? Then expect a small additional payment.
• Is your salary below the contribution ceilings? Then the bonus costs contributions, in December as in January.
• Does the bonus cover more than one year? Then check the fifth rule in your tax return.
• As a shareholder-managing director: what does the service contract say about when the Tantieme falls due? When are the annual accounts adopted?
• Is a direct investment with an IAB planned? In which year is the deduction worth more? Does a project fit the three-year investment deadline?

How we assess bonus years in an initial consultation

People who come to us with a bonus usually ask about deferral first. We put the income of the next two or three years side by side and look at which year a deduction is worth how much, which project fits the investment deadline and how much equity remains for it after tax. The tax assessment of the individual case stays with your tax adviser; we provide the project figures. This is exactly what we review in a no-obligation initial consultation. We make no return promises.