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Note that this article is only relevant for you if your company is located in Germany.
Tax brackets
What is a tax bracket?
The tax bracket determines the amount of tax deductions from the gross salary and is therefore relevant for all persons who are subject to income tax in Germany. By assigning individual tax brackets, the amount of wage-tax related deductions is determined for each employee.
Therefore, an employee's monthly net salary depends, among other things, on their current above-mentioned tax deduction characteristics.
Tip: The solidarity surcharge and the church tax are calculated from the amount of payable wage tax.
Overview of tax brackets and how they are assigned
An employee's tax bracket depends on their marital status and work situation. See the following table for an overview of the six possible tax brackets and their prerequisites.
Tax bracket
Employees
I
Single employees, or
Divorced employees (only if they have no children), or
Widowed employees (after one year from the death of the spouse), or
Married employees, but only if ▶︎ the couple is permanently separated, or ▶︎ the spouse/registered partner is living abroad.
II
Single parents (see tax bracket I) with at least one child registered in their home. The employee receives an individual child allowance for their child.
III
Married employees/registered civil partnerships, if
the employee's salary is significantly higher than that of their spouse/registered partner and the spouse/registered partner has tax bracket V, or
the spouses/registered partners do not live permanently separated and the spouses/registered partners live in Germany.
Notes ▶︎ Under the above prerequisites, widowed employees can also fall into this tax class up to one year after their spouse's death. ▶︎ In the case of a marriage, both spouses are automatically assigned the tax class combination IV/IV. If the tax class combination III/IV is preferred, both spouses have to apply for it.
IV
Married employees/registered civil partnerships, if
both receive approximately the same wages, and
the spouses/registered partners do not live permanently separated and the spouses/registered partners live in Germany.
Additional option: Tax bracket IV with a factor (spouses/registered partners who have different income levels and the tax liability is divided equally between both spouses/registered partners).
Note: In the case of marriage , both spouses are automatically assigned the tax class combination IV/IV. The additional option tax class IV with factor has to be applied for by both spouses.
v
Married employees/registered civil partnerships, if
the employee's salary is significantly lower than that of their spouse/registered partner, and
the spouse/registered partner has tax bracket III.
Note: In the case of marriage, both spouses are automatically assigned the tax class combination IV/IV. If the tax class combination III/IV is preferred, both spouses have to apply for it.
VI
The employee holds multiple jobs at the same time, or
the tax ID is missing.
Note: Tax class VI is assigned for other additional employment relationships; any tax-free amounts are satisfied in tax class I for the main employment relationship.