You pay:
Income tax
...on a small part of your disability insurance income (see table below)
...that is above the tax free threshold (10.908 Euros in 2023)
The rest is tax free.
How to work out your payout post tax
Example:
You plan on retiring at 65. You are 45, and suddenly unable to work. You have 2000 Euros disability insurance cover. Your payout will be the full 2000 Euros!
You have 64-45 = 20 years left til retirement.
You check the table below for 20 years and 2000 Euros
You see that no tax applies to you.
Years til retirement left | % of your disability income that is taxable | Sample payout of 2000 Euros post tax | Sample payout of 3000 Euros post tax | Sample payout of 5000 Euros post tax |
1 | 0% | 2000 | 3000 | 5000 |
2 | 1% | 2000 | 3000 | 5000 |
5 | 5% | 2000 | 3000 | 5000 |
10 | 12% | 2000 | 3000 | 5000 |
15 | 16% | 2000 | 3000 | 5000 |
20 | 21% | 2000 | 3000 | 4900 |
25 | 26% | 2000 | 3000 | 4800 |
30 | 30% | 2000 | 3000 | 4750 |
This is a simplified table with the following notes:
Full version here: http://www.gesetze-im-internet.de/estdv_1955/__55.html
Using tax free threshold of 2023
Rounded down to nearest 50 Euros (you likely get more even in the case 20,25,30 years for 5000 Euro payout)
Assuming no significant other income