Dec 05, 2025
Research allowance 2026 - the most important changes at a glance
Significant improvements to the tax credit for research and development will come into effect on January 1, 2026. The "Act for an Immediate Tax Investment Program to Strengthen Germany as a Business Location" will make the funding even more attractive.
Here you can find out what exactly is changing – and how you can benefit.
Maximum assessment basis
From 2026, the maximum annual assessment base will increase from €10 million to €12 million, thus enabling significantly greater tax relief. Small and medium-sized enterprises (SMEs) will therefore be eligible for up to €4.2 million in annual funding, while larger companies will receive up to €3 million.
Overhead flat rate
In addition to the direct project costs, consisting of personnel costs for R&D staff and, where applicable, co-entrepreneurs, 70% of the contract costs for R&D services within the EEA, and depreciation of capital goods, a flat rate of 20% of the direct costs is recognized as eligible overhead and operating costs. This means that for projects starting in 2026 or later, the basis for calculating the research allowance increases by 20%.
Depreciation
Depreciation on movable assets is eligible for higher amounts under the new provisions for declining-balance depreciation (§7 German Income Tax Act), provided that these assets are used for business purposes and are necessary for the R&D project. This regulation initially applies to movable fixed assets acquired or manufactured between June 30, 2025, and January 1, 2028.
Own contribution
The eligible hourly rate for in-house R&D services provided by co-entrepreneurs or sole proprietors will increase from a maximum of 70 euros to a maximum of 100 euros per hour for a maximum of 40 hours per week starting in 2026.
Comparison of currently relevant funding periods
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