Deposits and deductions are legally protected amounts which are taken into account when determining the need for assistance. In principle, Hartz IV receive benefits for the basic maintenance of living expenses if they can not meet the daily costs of living with sufficient income or assets. This results in a need for assistance, which is absorbed by application-oriented control systems. The amount of the benefits is determined on the basis of so-called rule requirements, taking into account the applicant’s allowances and deductible amounts to be credited.

The voluntary allowances and deductible amounts include:

  1. Free allowance for gainful employment
  2. Property-Grundfreibetrag
  3. Private retirement provision
  4. Employer-funded pension

1. Vacancies in Employment

When Arbeitslosengeld II is drawn, income from employment is attributed to basic insurance. Beneficiaries receive less money from their job center, since the need for help is reduced by additional income from the service provider. Since an employment and the associated independence to cover the maintenance of life is expressly provided by the legislature, voluntary contributions should ensure that service providers have more money at the end of the day.

Gross income is decisive for the amount of the contributions (income before taxes and duties). The following exemptions are taken into account:

  • The first 100.00 EUR from income from work is not included (basic amount),
  • In addition, 20% of the portion of the gross income that exceeds 100.00 EUR up to and including 1000.00 EUR remains non-invoicing.
  • In addition to the previous freedoms, 10% of gross wages over 1000.00 EUR up to the upper limit of earnings are not included.
    • In the case of persons entitled to benefits without a child, the upper earnings ceiling is a gross income of EUR 1,200.00,
    • For persons with a minimum age of one child at 1,500.00 EUR.

Gross amount of the income1300 EUR
Basic price100,00 EUR
from 100,01 EUR up to 1.000,00 EUR remain 20% free of charge180,00 EUR
from 1000,01 EUR up to 1.200,00 EUR remain 10% free of charge10,00 EUR
Sum of the free of tax income300,00 EUR
Calculation of eligible income:
Net amount900,00 EUR
Tax free amount– 300,00 EUR
Eligible income600,00 EUR

More information on crediting income for Hartz IV.

2. Basic Amount for Property

Taking into account its purpose, the legislature grants numerous voluntary contributions which are intended to protect the assets against the Hartz IV benefits (so-called “soft assets”). Each person living in the community of need and their partner is entitled to a basic amount of EUR 150.00 per full year, but at least EUR 3,100.00 each. A minimum basic allowance of 3,100.00 EUR is payable to every child under age. Every person entitled to a benefit in the community will receive an additional allowance of 750.00 EUR. This is provided for taking into account the appropriateness of necessary acquisitions.

The basic amount for assets is therefore granted irrespective of any purpose. However, the maximum amount of the capital transfer is limited, which is the upper limit for the year of birth of the ALG II beneficiary:

People by date of birthmax tax free amount
born before 01.01.194833.800 €
born before 01.01.19589.750 €
born after 31.12.19579.900 €
born after 31.12.196310.050 €
minors3.100 €

More information on crediting assets with Hartz IV.

3. Private Retirement Provision

In addition to the basic income tax, an eligible amount of 750.00 EUR per full year of life for private retirement pensions is available to every eligible person with a qualifying power. However, the prerequisite for this is that the utilization of the plant before the entry into retirement is irrevocably excluded by contract. In addition, a repurchase, a termination or a loan may not be possible in order to avoid misuse of the Hartz IV payments. Exclusion of this exploitation is sufficient if it is regulated until the age of 60.

4. Occupational Pensions

There are also free pensions if they are employed exclusively

Employer-financed company pensions are also free of charge for Hartz IV recipients, if an order is excluded before the occurrence of the pension. Otherwise, these can be added for the asset utilization by the cost carriers.