A tax allowance is an amount of income you can earn before any tax is due, or a fixed sum you are permitted to deduct for a specific purpose. The most common form is a personal allowance: a band of income taxed at 0%. Allowances effectively set the entry point of a progressive system and directly shape how much of your earnings are sheltered from tax.
In the UK the personal allowance is 12,570, meaning a worker earning 20,000 is taxed only on 7,430. Germany applies a basic tax-free allowance (Grundfreibetrag), France and Spain grant personal and family-based reductions, and Italy uses no-tax area mechanisms and detrazioni. The US equivalent is broadly the standard deduction rather than a named allowance.
Some allowances phase out at higher incomes. The UK personal allowance, for example, is reduced by 1 for every 2 earned above 100,000, disappearing entirely by 125,140, which creates an unusually high effective marginal rate in that band.
Allowances interact closely with brackets and deductions. Compare how different countries set them with our compare taxes by country tool, and see tax deduction and tax bracket.