Concept and Meaning of Income Adjustment
Die Income Adjustment is a central concept in German social and maintenance law. It refers to the process of determining a person’s relevant income, taking into account certain legally prescribed deductions and special provisions. The adjusted income forms the basis for claims to social benefits or the determination of maintenance payments owed.
Legal Basis of Income Adjustment
Areas of Application
Income adjustment is applied in various areas of law:
- Maintenance Law: Determination of income relevant for maintenance according to §§ 1601 et seq. BGB for establishing maintenance obligations.
- Social Law: Determination of applicable income according to SGB II, SGB XII, as well as BAföG for the calculation of social benefits such as unemployment benefit II, social assistance, or educational support.
- Child Benefit and Parental Allowance: Use of adjusted income to calculate entitlements.
Statutory Provisions
Income adjustment is not regulated in a single standalone law. Instead, applicable guidelines are derived from various statutory provisions, such as:
- § 11 SGB II (Income for Unemployment Benefit II)
- §§ 82 ff. SGB XII (Income in Social Assistance)
- § 850c ZPO (Attachment Exemption Limits)
- BAföG § 21 (Calculation of income for educational support)
- Guidelines of the highest state courts (e.g., Düsseldorf Table in maintenance law)
Methodology of Income Adjustment
Starting Point: Gross Income
The determination of income usually begins with gross income from self-employment or employment, pensions, rental and leasing income, capital assets, and other revenues.
Deductible Allowances
In the course of income adjustment, legally or judicially recognized deductions are made, such as:
Statutory Social Security Contributions
These include:
- Contributions to health, long-term care, pension, and unemployment insurance
- Contributions to other compulsory insurance
Taxes
- Income tax (if applicable, wage tax)
- Solidarity surcharge and, if applicable, church tax
Occupational Expenses
This includes expenses caused by employment, for example:
- Commuting expenses to the workplace
- Work-related equipment
- Work clothing
Other Deductible Amounts
Other possible deductions include:
- Maintenance payments to those with priority claims
- Debt obligations, if they are unavoidable and reasonable
- Contributions to private health and retirement insurance (for self-employed persons with proof)
- Childcare costs
The specific deductibility and amount are determined by the relevant legal provisions and current case law.
Non-deductible Amounts
Generally, the following are not deducted:
- Luxury expenses (e.g., expensive hobbies)
- Voluntary generous savings (beyond the minimum coverage)
- Debts knowingly incurred despite maintenance obligations
Special Aspects in Maintenance Law
Relevance of Adjusted Income
In maintenance law, the adjusted net income is the central variable for determining the amount of maintenance owed. The Düsseldorf Table and supplementary guidelines of the Higher Regional Courts provide guidance on calculation and the deductibility of individual items.
Exemption Amount and Financial Capacity
Income adjustment also serves to clarify whether and to what extent a person is financially able to pay. The law recognizes minimum amounts—so-called exemption amounts—that must remain with the obliged person for their own subsistence.
Special Provisions for Self-Employment
For self-employed individuals, income is often determined over a longer period (usually three years) based on an average value. Business expenses are recognized as deductible items, provided they are business-related and reasonable.
Income Adjustment in Social Law
SGB II – Unemployment Benefit II (Citizen’s Income)
In the context of SGB II, the so-called relevant income (§ 11 SGB II) is decisive. The following amounts, among others, are deducted from income:
- Taxes on income
- Compulsory social security contributions
- Allowances for earned income according to § 11b SGB II (staggered deduction of certain portions of income to promote employment)
- Amounts for Riester pension and other recognized retirement provisions
SGB XII – Social Assistance
In social assistance (§ 82 SGB XII), the income to be taken into account is also calculated after deducting certain statutorily prescribed items. The allowances and possible deductions vary depending on the circumstances and benefit involved.
BAföG
For BAföG purposes, the income of the parents or applicant is adjusted according to § 21 BAföG. In addition to taxes and social security contributions, further allowances (e.g., for dependents) are granted.
Case Law and Development
The methodology and scope of income adjustment are subject to multifaceted and ongoing interpretation by the courts of first instance. Decisions mainly concern the deductibility of individual items, issues of exemption amounts, and the consideration of atypical income situations.
Particular importance attaches to the development of the Düsseldorf Table, the guidelines of the Higher Regional Courts, as well as relevant rulings of the Federal Court of Justice and Federal Social Court.
Summary and Significance
Income adjustment is a complex process, defined in laws and case law, to determine legally relevant income. It serves, in particular, the fair distribution of financial burdens in maintenance obligations and the targeted granting of social benefits. Statutory provisions, administrative regulations, and current case law must be continuously observed to determine the adjusted income correctly.
Related Terms:
- Income Determination
- Net Income
- Exemption Amount
- Düsseldorf Table
- Needs-Based Community
- Attachable Income
Frequently Asked Questions
Which income is legally considered in income adjustment?
In the legal context of income adjustment—for example in maintenance law, social law, or tax law—all relevant income of a person or household is considered. This includes, in particular, employment income from dependent or self-employed work, income from rental and leasing, capital income, pensions, and retirement benefits, as well as, if applicable, other recurring income such as maintenance payments or transfer payments. Generally, gross income is used as a starting point, from which certain legally defined deductions are made. Income that is explicitly privileged or earmarked (such as certain social benefits or expense allowances) may be partially or fully disregarded, provided this is stipulated by law or case law. The specific regulations regarding the consideration of individual types of income are found in the respective substantive law (e.g., SGB II, BGB, EStG) and the relevant case law.
Which deductions are legally permitted in income adjustment?
Within the framework of income adjustment, only those deductions that are expressly provided for or recognized in the relevant law may be made. Typically, this includes in particular taxes and social security contributions, as these reduce the actual availability of income. In addition, professional expenses (such as commuting costs to the workplace or necessary work equipment), certain insurance premiums, and other legally recognized burdens can be deductible. For child maintenance under the Düsseldorf Table, for example, the law allows deduction of professional expenses of up to 5% of net income provided proper documentation is submitted. Additionally, in some contexts, debt obligations or extraordinary burdens (e.g., additional costs due to disability) may be partially deductible, though a strict review of necessity and appropriateness is routinely applied. The decisive factors are always the applicable legal provisions and current court decisions.
Is one-time income to be considered in income adjustment?
Whether one-time incomes—such as severance payments, inheritances, one-off bonus payments, or proceeds from sales—are to be included in income adjustment is governed by the respective law. In maintenance law, for example, severance payments and other one-time income are typically apportioned over a reasonable period and treated as income if they increase economic capacity. In social benefits law, one-time income can under § 11 SGB II be fully offset in the month received or distributed over several months if this affects neediness and the purpose of the income is long term. The exact treatment always depends on the individual case and the specific legal framework. Prior legal advice is especially recommended for larger amounts to avoid unintended consequences.
How are persons liable to pay maintenance considered in income adjustment?
In family and maintenance law, it is particularly examined whether and to what extent a person owes maintenance to others. Payments to individuals with priority maintenance claims (such as minor children) are fully deducted from the income relevant for maintenance, as they reduce the payer’s economic capacity. For those with lower-priority claims, reduced deductions or special attribution rules may apply depending on the hierarchy of maintenance rights (§ 1609 BGB). In some cases, imputed income may need to be considered if a breach of duty—such as deliberate unemployment—is established. In such cases, calculations are based on what could realistically be earned.
Are there special considerations for the self-employed in income adjustment?
Self-employed persons are subject to their own legal requirements regarding income adjustment. As a rule, the average taxable profit of the last years (usually 3 years) is used, as income can fluctuate. Business-related expenses, depreciations, and unavoidable business losses are deductible; however, private expenses (e.g., private insurance, private car use) may partially be added back to income if they exceed tax deductibility or are not business-related. Full and verifiable documentation is required for determining relevant income, especially tax assessments, balance sheets, or profit-and-loss statements. Special attention is paid to hidden profit distributions or the mixing of private and business finances.
How do mini-jobs or secondary income affect income adjustment?
Mini-jobs or secondary income are considered as income and must generally be taken into account during income adjustment. The income earned is added to the main income, with applicable allowances or deduction rules being observed. In certain legal contexts, such as family benefit equalization or social benefits, specific allowances apply to marginal employment (e.g., trainers’ allowance, allowances under § 11b SGB II), which are first deducted from income. If secondary or mini-income primarily serves to cover work-related expenses or special burdens, it can, in individual cases, be treated as income-reducing. For minor children or trainees, income from student jobs is sometimes only partially credited, to provide an incentive for their own earning.
Are there special regulations for income-reducing allowances in social law?
In social law, especially regarding unemployment benefit II (SGB II), social assistance (SGB XII), or the Housing Benefits Act (WoGG), special income-reducing allowances apply. Under § 11b SGB II, for example, eligible individuals are entitled to allowances on earned income, staggered according to the amount of gross income (basic allowance, employee allowance). Furthermore, contributions to certain insurances or expenses for legally dependent persons are taken into account. Third-party donations may be exempt in whole or in part depending on their purpose and amount. The housing benefit and BAföG laws also contain special deductions, such as for childcare or training costs. The specific application is based on the relevant social legislation and is adjusted annually, so that individual advice is always advisable.
