Increase in disability lump sums

The often suggested increase in the lump-sum disability allowance is now being implemented and combined with further tax improvements for the disabled and long-term care cases.

Taxpayers with disabilities can also claim the disability lump sum for income tax purposes instead of itemizing expenses for disability-related living requirements. This lump sum has remained unchanged for a long time, which is why in recent years there have been regular proposals, particularly from the Bundesrat, to increase it in the course of other tax amendment laws. This request has also been regularly rejected by the Federal Ministry of Finance.

Now, however, the ministry itself has presented a draft bill that will raise the lump sum and at the same time implement various other relief measures for disabled taxpayers and care cases. The draft for the "Act to Increase the Disabled Persons' Lump Sum and Adjust Other Tax Regulations" was passed by the federal government in July 2020 and forwarded to the Bundestag so that the legislative process can be completed this year.

• Lump sum: The lump-sum disability allowance covers increased expenses for daily living, the sole reason for which is difficult to prove. This lump sum, the amount of which depends on the degree of disability, will now be doubled from 2021. This means that in future, those affected will be able to claim a lump sum of up to €2,840 instead of the previous maximum of €1,420. For blind and disabled people who are helpless, the lump sum will increase from the previous 3,700 euros to 7,400 euros. All other disability-related expenses that do not fall under the lump sum (e.g., conversion or travel costs) can continue to be additionally taken into account for tax purposes, provided they exceed the reasonable burden.

  

• Travel costs: Instead of the time-consuming individual proof of travel costs incurred due to disability, a lump sum regulation is introduced in the amount of the previously applicable maximum amounts. This means that people with a walking disability of at least 80 % or with at least 70 % and the "G" mark will in future be able to claim a lump sum of 900 euros. For people with exceptional walking disabilities and the "aG" mark, as well as blind or disabled people with the "H" mark, the lump sum will even be 4,500 euros. This new lump sum for travel expenses is deducted from the reasonable burden and is also the maximum amount for the deduction of disability-related travel expenses as an extraordinary burden.

• Disability under 50 %: The procedure for taxpayers with a degree of disability below 50 % will be simplified. Additional requirements such as a permanent loss of physical mobility will no longer have to be proven from 2021. In addition, the system for disability lump sums will be adapted to social law. As a result, taxpayers with a disability of at least 20 % will also be able to claim the disability lump sum from 2021.

• Nursing Lump Sum: The Act also contains several improvements to the care lump sum. The care lump sum is primarily intended to cover the non-quantifiable expenses incurred by the caregiver for personal care. In addition to home care, the prerequisite for the granting of the care lump sum is that the caregiver does not receive any income for the care. On the other hand, the fact that the person being cared for is "helpless" will no longer be required in the future. The current care allowance of 924 euros for care degree 4 or 5 will be raised to 1,800 euros and thus almost doubled. In addition, a lump sum of 600 euros will be granted in future for care level 2 and a lump sum of 1,100 euros for care level 3.

In the comments received from the associations, the planned changes were largely welcomed. However, there was criticism of the fact that the lump sums have remained unchanged for 45 years, while other tax lump sums have been constantly adjusted. The doubling therefore just barely compensates for inflation, which is why the associations are calling for a regulation on dynamization.