Inflation Compensation Bonus: Deadlines and Last Chance 2025

Inflation Compensation Bonus: Review and Conclusion

The Inflation Compensation Bonus (Inflationsausgleichsprämie, IAP) was one of the biggest tax relief measures in recent years: Employers could pay their employees up to 3,000 euros tax-free and social security-free between October 26, 2022 and December 31, 2024. This deadline has now expired definitively.

How the Bonus Worked

The legal basis was Section 3 No. 11c EStG. Employers could pay the bonus in one sum or in installments - up to a maximum of 3,000 euros per employment relationship. The key requirement: The payment had to be in addition to the already owed salary.

Net Comparison: Inflation Bonus vs. Regular Bonus

What Comes After the Inflation Bonus? Alternatives 2025/2026

Since January 1, 2025, there is no direct successor to the IAP. Employers can use:

• Benefits in kind (50 euros/month): Vouchers or in-kind benefits up to 50 euros monthly remain tax-free. That's 600 euros per year.
• Recreation allowance: Up to 156 euros for the employee, 104 euros for spouse and 52 euros per child.
• Health promotion (600 euros/year): Subsidies for certified prevention courses remain tax-free.
• Jobticket / Deutschlandticket: Public transport subsidies are tax-free when granted in addition to salary.
• Company pension: Employer contributions to bAV are social security-free up to 4% of the contribution ceiling.

Sources: Section 3 No. 11c EStG, BMF guidance dated 07.12.2022, Federal Ministry of Finance FAQ

Net check: Check what remains from regular one-time payments or salary adjustments: Go to Salary Calculator.