Tax Class in Germany [Guide 2024] - Navigate Germany

If you are a worker in Germany,  you must know about the Tax class. This article is about tax classes, types of taxes, and tax payments you need to pay from your income as an income tax, and social security contributions, solidarity tax, VAT and Church Tax.

Individual Income Tax

Everyone living or working in Germany is bound to pay the individual income tax (Einkommensteuer). Minimum untaxed allowance for a single person is up to €11,604 for a married person, it is up to €23,208.

Income Tax and The Amount of Income Tax

Income tax is the amount paid to the government by every individual from their earnings. This amount is directly deducted from the salary of an employed individual and your employer pays those taxes to the German Tax Office (Finanzamt). Other deductions include social security contributions.

The tax-free income (Grundfreibetrag) for 2024 is up to €11,604 and the rate is 42% for amounts exceeding €66,761. The rich tax (Reichensteuer) is 45% at an income of €277,825.

Calculation Of Wage Tax Rates In 2024

Progressive Tax

Progressive tax system is used to calculate the tax in Germany. If your earnings are high, you will pay more taxes. Use this calculator to calculate income tax on your salary.

Income After Tax

Calculate your weekly or monthly wage and deduct the contributions and income tax calculated online through the [german income tax](https://navigategermany.com/netto-vs-brutto/) calculator. The resulting amount is the take-home amount after tax and deductions.

german tax classes

Combination of class 3 and 5 is only possible when both spouses are living in Germany. Class 1 applies to the spouse  living in their home country. Tax class changes when a spouse gets registered in Germany.

Identification of Tax Class In Germany

You will get your tax ID within six weeks of getting registered at the city registration office (Rathaus) in Germany which will be sent to your employer. The German Tax Office (Finanzamt) assigns the tax class according to your marital status. Employers calculate the deductions after getting your tax ID and tax class. They will deduct the highest tax rate applicable to your earnings and adjust the extra deducted tax in your next payslip. Your tax class is also mentioned on the payslip under SKI (Steuerklasse).

How to Pay Less Tax In Germany?

Tax declaration

If you are a self employed person, fill an annual tax declaration. You can use different platforms such as “Steuerberater” for tax returns.

Eligibility of Tax Refund in Germany

If you are employed, tax return is not compulsory, but it is good to submit it to see if you are entitled to a tax refund if you haven’t been in Germany for a complete tax year.

Tax Return Deadline

The deadline to submit your tax return is 31st May, but it changed to 2nd September due to COVID. The tax year is the same as the calendar year in Germany.

Change of Tax Class in Germany

Change your tax class online via elster or form by following this GUIDE

Other Taxes

Other forms of taxes include solidarity tax, church tax, and VAT.

Solidarity Tax

The solidarity tax (Solidaritätszuschlag) was introduced in 1991 after reunification and applies to everyone earning above €972 and they must pay up to 5.5% contribution from your salary. The Solidarity Tax helps in financing the recurring costs related to a unified Germany and rebuilding Eastern Germany.

Church Tax

Everyone in Germany should pay the Church Tax (Kirchensteuer) irrespective of their religion. Around 8 to 9% from your gross salary is deducted as Church Tax.

Value Added Tax

If you are registered, you will pay VAT (Mehrwertsteuer) for all of the non-essential and luxury items. The standard VAT is 19% whereas the reduced rate is 17% for items like flowers and books.

Seconded (Temporary Transfer) Employees

Employees who move to Germany to get an international experience are called seconded employees. They remain employed with the same company and active on the payroll of their home country. They pay tax to the tax office in their home country as they are not based in Germany. Such employees are not bound to contribute to social security. This rule applies in all EEA (European Economic Area) and few other countries with the same agreement as Germany. The rule of secondment usually applies to 2-year secondments and can be increased up to 5 years.

Final Remarks

Your marital status decides the tax class in Germany. If there is any change in income, your tax class might also change and you can receive a temporary tax advantage on your earnings.