Investment allowance 2026 (Investitionsfreibetrag)

Definition

The investment allowance (Investitionsfreibetrag, § 11 EStG) is an additional business-expense deduction for acquiring or producing depreciable fixed assets. In 2026 it is 20.00% of the acquisition cost, or 22.00% for ecological assets, on at most €1,000,000 per financial year. Depreciation is not affected: the asset is written off in the normal way, and the allowance comes on top.

Rates by year

The rules

• Ceiling on the base: the €1,000,000 applies to the acquisition cost per financial year, not to the allowance itself, so €1,000,000 of acquisitions yields up to €200,000 of deduction. Both rates share that single ceiling.
• Not alongside the profit allowance: § 11 (3) Z 1 rules out the investment allowance for any asset used to cover the investment-based profit allowance. Each asset takes one or the other.
• Not with a flat rate: if profit is determined at a flat rate, such as Basispauschalierung, the allowance is not available (§ 11 (1) Z 4).
• Excluded: low-value and used assets, assets with a useful life under four years, and plant for fossil fuels (§ 11 (2) and (3)).

Example: acquisition of €50,000 (2026)

A round investment of €50,000, such as a machine: the investment allowance is 20.00% of it, so €10,000, or 22.00% for an ecological asset, so €11,000. That amount reduces profit on top of the depreciation, which continues over the useful life.

See also

• Profit allowance, the alternative per asset, never both at once.
• Flat-rate expenses, flat-rate profit calculation, which rules out the investment allowance.