German Tax Calculator

Tax Category

There are 6 tax so called classes with different lump sums according to the circumstances

Category I:
Those single or separated, but not falling into either category II or III.

Category II:
Single and separated, with a child, entitling them to a child's allowance

Category III:
Married employee. Tax rate is based on the married couple tariff (tax is calculated from half of the taxable income and then doubled)

Category IV:
Married employees if both of them receive wage.

Category V:
Same as IV. But one of the married employees stays with a tax card of category III (favour see above), the other one needs then category V. See 'Married couple, both get wage'.

Category VI:
Employees who receive a wage from other employments too, need a second (or more) tax card(s) of category VI

Pension

With pension/unemployment insurance:
Normal employees receiving wage have to pay 50% (2020: 9.3% of the wage) of the pension/unemployment insurance (50% pays the employer).

Without pension/unemployment insurance:
Some people have not to pay pension insurance. Like the employed owner of a GmbH (or people employed in the civil service).

Children

For every child (up to 25 years if still in professional training) living in Germany (regardless of the nationality) the employee get a tax reduction. But this influences only the solidarity surcharge (and the amount of the church tax) because the possible reduction of the taxable income (2020: 7,812 €/child) is already compensated by the child benefit (to get this benefit the application form (only in German) has to be send to the local 'Arbeitsagentur'. Addresses could be found here).

For the first and second child (living in Germany) parents get in 2020 2,448 €/year, for the third child 2,520 €/year, from the fourth on 2,820 €/year paid in monthly rates.

Being Parent

Having a child (even older then 25) reduces the amount of disability insurance.

Aged 65 or older

Employees being older then 64 get an old age allowance of a certain percentage (2020: 16%) of their wage but only up to a maximum amount (2020: 760 €) deductible from the income.

Being a member of a church

Employees being a member of the catholic, protestant and some other churches have to pay church tax. The rate depends on the state (mostly 9% of the income tax).

Working in East Germany/Saxony

Employees working in East Germany have a lower maximum wage where the premium for the pension insurance (and for the lump sum) is calculated on (2020 in West Germany: 82,800 €/year, in East Germany: 77,400 €/year, i.e. highest premium/month of pension insurance in East Germany is therefore 77,400 * 9.3% / 12 = 599.85 €. Higher wage will not increase this value). Saxonians have one holyday more, but pay for this advantage 0.5% more disability insurance.

450-1300 Euro-Job ("sliding zone")

getting less then 1300 Euro monthly (category 6 not possible). For tax categories 1-5 the social security contributions are less then normal (checkbox activated).

Tax-free allowance

If tax deductible expenses are already known in the beginning of a year (and higher then the total lump sum of 1000 € for expenses that are related to the employment) the tax authorities will mention this on the tax card (if asked) and these expenses are already taken in consideration monthly (example: expenses for travelling between the residential home and the place of work). Please fill in this field always the allowance for the year.

Important notice:
the basic tax free allowance (9,408 € in 2020, for couples the double) is part of the tax tariff and therefore already included in the wage and income tax calculation.

Extra payment

like a 13th monthly wage, additional money at Christmas and so on. In case of several extra payments/year choose year base and fill in the total sums of wages (monthly wage x 12) and extra payments.

In case of an extra payment the wage tax per month is calculated as follows: tax for the wage per year is calculated first without and then with the extra payment. The difference is the tax for the extra payment alone. The year tax minus the tax for the extra payment is divided by 12 to get the wage tax without the tax for the extra payment per month. To this 1/12 the tax for the extra payment is then added again to get the total wage tax for this month with extra payment.

Important:
the total gross salary in the month of extra payment = monthly gross salary + extra payment. The net income in this month is based on this total salary!

The Program shows now the tax for the extra payment separately and could be therefore used to find out the marginal tax rate (the tax rate that applies to the last Euro of the income/wage). To get this rate enter on a monthly base preferably a value of 1000 Euro in this field. If the tax for this extra payment is for instance 320 Euro then marginal tax rate is 320/1000 = 32%.