What is the commuter allowance?
The German commuter allowance — legally the distance allowance (Entfernungspauschale) — is one of the most important items in an employee's tax return. It lets you deduct the cost of travelling between home and your primary place of work as a flat-rate expense. The special part: it does not matter how much you actually spend on fuel, tickets or wear and tear. Only the distance counts.
Deductible expenses lower your taxable income. The higher your expenses, the less tax you pay — provided you get above the automatically granted employee lump sum. You can work out exactly what the commuter allowance is worth for your particular commute in seconds with our commuter allowance calculator.
The big change in 2026: 38 cents from the first kilometre
On 1 January 2026 the legislator fundamentally simplified the distance allowance. Where a staggered rate applied until the end of 2025, there is now a uniform rate of €0.38 (38 cents) per kilometre — from the very first kilometre.
As a reminder, this is how the old rule looked until 2025:
- €0.30 per kilometre for the first 20 kilometres
- €0.38 per kilometre from the 21st kilometre
The new rule from 2026 is simply: €0.38 per kilometre for the entire one-way distance. So anyone with a short or medium commute benefits the most, because the first 20 kilometres now also count at 38 instead of 30 cents.
How to calculate your commuter allowance
The formula is simple: distance in kilometres × €0.38 × working days per year. It is important that only the one-way distance counts — the trip there, not there and back combined.
An example: you drive to a workplace 25 kilometres away on 220 working days. That gives: 25 km × €0.38 × 220 days = €2,090 in deductible expenses from the commute alone. Under the old rule it would have been only (20 × €0.30 + 5 × €0.38) × 220 = €1,738. In this case the new rule brings you €352 more in deductible expenses per year.
Because your individual advantage depends heavily on distance and working days, it is worth using the commuter allowance calculator: it shows not only the expenses but also the actual tax saving and the difference between the old and new rule.
How much tax do you really save?
A common misunderstanding: the deductible expenses from the commuter allowance are not your tax saving. They reduce your taxable income, and how much you actually save depends on your personal marginal tax rate.
Let us stick with the example of €2,090 in commuter allowance. At a marginal tax rate of 30% the rough tax saving is about €627. At 42% it would be around €878. The marginal tax rate is the rate that applies to your last euro earned — the higher your income, the higher this rate and the more each euro of expenses is worth.
The employee lump sum: the decisive threshold
There is one important catch. The tax office automatically deducts an expenses lump sum of €1,230 from every employee — without any receipts or proof. This means only once your total deductible expenses exceed this €1,230 does each additional euro bring extra tax savings.
With a very short commute it can happen that your commuter allowance stays below the lump sum and has no additional tax effect. Rule of thumb: from about 15 kilometres one way (at 220 working days) the commuter allowance alone exceeds the €1,230 threshold. If you have further expenses such as work equipment, training or professional literature, the commute can pay off earlier.
The mode of transport does not matter
The distance allowance is independent of the mode of transport. Whether you get to work by car, train, bus, bicycle or on foot makes no difference to the amount. However, those who use public transport and have no own car must observe a cap: the allowance is then limited to €4,500 per year — unless the actual ticket costs are higher, in which case those count.
Accounting for home office correctly
Since the pandemic many people work at least partly from home. For every home-office day there is no commute — you may not include these days as travel days in the commuter allowance. Instead there is the home-office lump sum of €6 per day (at most 210 days, i.e. €1,260 per year). For one and the same day you can only claim one of the two lump sums.
So anyone who works two days a week from home should reduce the number of working days in the calculator accordingly to get a realistic result.
Mobility premium for low earners
Not everyone benefits from a higher deduction. Those who earn so little that their taxable income is below the basic tax-free allowance (2026: €12,348) pay little or no income tax anyway — a higher deduction then has no tax effect. For these cases there is the permanently established mobility premium: 14% of the effective distance allowance is paid out. You claim the premium via your tax return.
Conclusion: the new commuter allowance pays off
The unification to 38 cents from the first kilometre is a noticeable relief, especially for commuters with short and medium distances. It is important to understand the difference between deductible expenses and actual tax saving, and to keep the employee lump sum in mind.
Use the commuter allowance calculator to work out your personal advantage for 2026 — including the comparison with the old rule, the tax saving and the mobility premium. That way you can see at a glance what your commute is worth in your tax return.