Income and deductions

Taxable income is divided into capital income and earned income

Capital income consists of income generated by your property and assets: dividends, capital gains, rental income, etc. All other income, such as your wages and pension, is earned income.

Capital income and earned income are taxed differently. Capital income has a fixed tax rate. Earned income is taxed progressively – the more income you receive, the higher the tax rate.

Deductions from income, credit from taxes

Tax deductions reduce the amount of income you must pay taxes for. Depending on the deduction, the relevant amounts can be deducted either in state taxation or municipal taxation. Types of deductions include the deduction for daily commuting expenses the deduction for expenses for the production of income.

Tax credits are a type of deduction that directly reduces the total tax you must pay. Types of credit include the credit for household expenses, the credit for child maintenance and the credit for income spreading.

Calculate how deductions and credits can affect your taxes (


Go to AnswerBank