How much income tax do you pay in Germany?
Find out online!
Are you married? Then you’re likely to pay less income tax in Germany!
Everyone who works in Germany gets a tax bracket (Steuerklasse). How much income tax you pay depends on the tax category that you are in.
Which tax bracket you get depends on
- your familial status
- your social situation
- the amount of your income etc.
Hard facts about German income tax…
What is a tax bracket?
All German tax payers get a tax bracket (Lohnsteuerklasse). This also applies to foreigners living and working in Germany.
This tax bracket determines the amount of income tax you need to pay.
What is Einkommensteuer?
Einkommensteuer means income tax. Income tax is a tax collected by the German government. It is based on how much money you earn in a year and other factors, such as your family/marital status. You need to submit your income tax declaration at the end of the financial year.
Who must submit German income tax declarations?
If you’re in tax bracket 3 or 5, or receive social indemnities, you are obliged to submit an income tax declaration.
Where do I submit my German income tax declaration?
You submit your tax declaration online in Germany. You can submit the tax declaration online. The website is called www.elster.de. So far the website is only in German.
It probably makes sense to get a tax advisor (Steuerberater) to help you with this in case you are not too confident speaking German. To find one just google “Steuerberater English + your city“.
How much income tax do I have to pay in Germany?
Generally speaking, the higher your taxable income in Germany, the higher your rate of taxation. If you are married, then you may get considerable income tax advantages in Germany.
Scenario 1. The maximum tax rate is 45% and only applies for incomes exceeding 250,730 euros a year if you are unmarried/not in a civil partnership.
Scenario 2. For couples who are married or in a civil partnership, the maximum tax rate is of 45% only applies if you earn more than 501,460 euros.
The Federal Ministry of Tax has created an online tax calculator. Unfortunately, it is in German only.
But if you want to find out how much tax you have to pay, get a German friend or colleague and type in your data here:
What is your German tax bracket?
Tax Bracket/ Steuerklasse 1
If you are single (unmarried), permanently separated or divorced, then you are in tax bracket 1.
If you are in this category you are likely to apply for the highest income tax rate in Germany.
In this tax bracket, the German income tax is about 42% of your salary.
Tax Bracket/ Steuerklasse 2
This tax bracket is for single parents who live alone and apply for tax relief.
Tax Bracket/ Steuerklasse 3
Employees who are married or in a civil partnership can choose this tax bracket if one of the spouses does not work or earns considerably less than the other.
The other spouse or partner then comes under tax bracket 5.
Note that if the two spouses or partners earn about the same amount, tax bracket 4 is better for them.
Tax Bracket/ Steuerklasse 4
Married couples and civil partners can apply for the income splitting system.
Income splitting means that the one who earns more only has to pay the income tax rate of the one who earns less.
In simple words, this means that you save tax!
Peter is single and must pay 41% tax. Sophie is single and pays 30% income tax. Now they marry. Now they both pay 30% tax.
Note: This is just an example with fictional numbers. Income tax is infinitely more complex than this, unfortunately…
Tax Bracket/ Steuerklasse 5
Jobholders who are married/in a civil partnership are in this tax bracket if their spouse or partner comes under tax bracket 3.
Tax Bracket/ Steuerklasse 6
This applies to everyone who has a second job or more.
Can I change my ‘Steuerklasse’ in Germany?
Yes, you can!
For example, if you have married, got divorced, started a new job – then you can apply for a change of Steuerklasse / tax bracket in Germany.
You can also change your German tax bracket if the tax office has classified you in the wrong tax bracket.
How to change my German tax bracket?
To change your German Steuerklasse, you just have to fill out an application form called “Antrag auf Lohnsteuerklassenwechsel”.
It would be easiest to drop by in person at your local tax office (Finanzamt).
Say that you want to change your tax bracket, “Ich möchte meine Lohnsteuerklasse wechseln” (I want to change my tax bracket).
To make sure that you get classified into the correct tax bracket right from the start, it is very important that you take all relevant certificates to the Burgeramt when you register.
What married couples must know about tax brackets in Germany
Scenario 1: You’re married and person A is earning much more money than person B. Or, person A earns money and person B does not earn money. Then person A is in tax bracket 3 and person B is in tax bracket 5.
Scenario 2. Person A and B roughly earn the same amount. Then person A and B are in tax bracket 4. Here you are part of the income splitting system.
The difference in income tax between married couples and singles is quite striking in Germany. It is very controversial.
Why? Because single people must pay much more income tax than families. It seems a little unfair.
Married people have another tax advantage.
If you are married then you can earn about 16.000 Euros without having to pay any income tax at all! This is called a ‘Steuerfreibetrag’.
If you are single, then you can earn about 8.000 Euros before you must pay income tax in Germany…
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