Germany Income Tax Guide
Everything you need to know about income tax in Germany (2026)
Income Tax Basics
Income tax in Germany is known as Einkommensteuer (income tax) or Lohnsteuer (wage tax) for employees. It's a progressive tax system, meaning the rate increases as your income rises. Most employees have tax automatically deducted from their salary by their employer through the Lohnsteuer system.
Who Needs to Pay Income Tax?
You pay income tax if you earn more than the Grundfreibetrag (basic allowance) — the amount you can earn tax-free each year. For 2026, this is €12,348 for single taxpayers (€24,696 for married couples filing jointly).
The German Tax Year
The German tax year runs from 1 January to 31 December (Kalenderjahr). This is the same as the calendar year. If you're employed, your employer deducts Lohnsteuer monthly from your salary. You can file an annual tax return (Steuererklärung) to claim back any overpaid tax.
2026 Tax Brackets & Rates
Germany uses a progressive tax system with multiple zones. Unlike simple bracket systems, Germany uses mathematical formulas to calculate tax smoothly across each zone. Here are the current tax brackets:
| Tax Zone | Taxable Income | Tax Rate |
|---|---|---|
| Basic Allowance | Up to €12,348 | 0% |
| Progressive Zone 1 | €12,349 - €17,799 | 14% - 24% |
| Progressive Zone 2 | €17,800 - €69,878 | 24% - 42% |
| Proportional Zone | €69,879 - €277,825 | 42% |
| Top Rate (Reichensteuer) | Over €277,826 | 45% |
Real-World Examples
€35,000 Salary
- Tax-free: €12,348
- Progressive zones: €22,652
- Income Tax: ~€4,100
€60,000 Salary
- Tax-free: €12,348
- Progressive zones: €47,652
- Income Tax: ~€12,800
€100,000 Salary
- Tax-free: €12,348
- At 42%: €87,652
- Income Tax: ~€30,600
Important: These calculations are income tax only. They don't include social security contributions, church tax, or solidarity surcharge. Use our German Tax Calculator to see your complete take-home pay.
Basic Allowance (Grundfreibetrag)
The Grundfreibetrag (basic allowance) is the amount of income you can earn tax-free in Germany. This is the portion of your income that is exempt from income tax and ensures a minimum standard of living.
2026 Basic Allowance
€12,348
This is the amount you can earn tax-free
For married couples filing jointly: €24,696
In 2025, the basic allowance was €12,096. The allowance typically increases each year to account for inflation and cost of living adjustments.
Tax Classes (Steuerklassen)
Germany has six tax classes (Steuerklassen) that determine how much tax is deducted from your salary. Your employer uses this to calculate Lohnsteuer. You can change your tax class at the Finanzamt (tax office).
Class I (I)
Single, divorced, separated, or widowed
This is the most common class for single people. No special deductions apply.
Class II (II)
Single parents living with at least one child
Includes a tax relief amount (Entlastungsbetrag) for single parents.
Class III (III)
Married couples where one spouse earns significantly more
The higher earner uses this class while the partner uses Class V. The couple gets the combined allowance but tax is front-loaded on the higher earner.
Class IV (IV)
Married couples with similar incomes
Both spouses use Class IV. Similar to Class I but with double the basic allowance.
Class V (V)
Married couples where one spouse earns significantly less
Used by the lower-earning spouse in a married couple (when partner uses Class III). Higher tax rates apply.
Class VI (VI)
Second job or multiple employments
If you have more than one employer, your second job uses Class VI with no basic allowance. Very little tax is taken at source, so you'll likely owe tax when filing.
Tip: Married couples should consider their combined income when choosing between Classes III/IV and III/V. The total tax paid is the same, but the distribution between spouses differs.
Church Tax (Kirchensteuer)
If you're a member of a Christian church (Catholic, Protestant) or another religious community that collects church tax in Germany, you'll pay Kirchensteuer (church tax). This is typically 8-9% of your income tax liability.
Church Tax Rates by State
- • 8% of income tax: Baden-Württemberg, Bayern (Bavaria)
- • 9% of income tax: All other states
How Church Tax Works
Church tax is calculated as a percentage of your income tax (not your gross income). If your income tax is €5,000 and you're in a 9% state, you'll pay €450 in church tax. It's automatically deducted by your employer if you're registered with a church.
Important: You can opt out of church tax by formally leaving your church at the local court (Amtsgericht). However, this is a serious decision with implications beyond tax.
Solidarity Surcharge (Solidaritätszuschlag)
The Solidaritätszuschlag (solidarity surcharge) was originally introduced in 1991 to help fund German reunification. It applies to most taxpayers and is calculated as a percentage of your income tax.
2026 Solidarity Surcharge Rules
- • Rate: 5.5% of income tax
- • Threshold: Only applies if income tax exceeds €20,350/year
- • Exemption: Most low and middle-income earners are exempt
Example Calculation
If your income tax is €15,000:
No solidarity surcharge (below €20,350 threshold)
If your income tax is €25,000:
Solidarity surcharge = €25,000 × 5.5% = €1,375
There's also a "mitigation zone" (Milderungszone) that phases in the surcharge gradually for those just above the threshold, so you won't see a sudden jump in the total amount owed.
Understanding Your German Payslip
German payslips (Gehaltsabrechnung or Entgeltnachweis) contain detailed information about your earnings and deductions. Here's what you'll typically find:
Bruttogehalt (Gross Pay)
Your total salary before any deductions. This includes your base salary plus any bonuses, overtime, or allowances.
Lohnsteuer (Wage Tax)
The main income tax deducted from your salary. This is calculated based on your tax class and taxable income.
Also shows: Solidaritätszuschlag (surcharge), Kirchensteuer (church tax if applicable)
Sozialversicherungsbeiträge (Social Security)
Your share of contributions:
- • Krankenversicherung (Health Insurance)
- • Rentenversicherung (Pension Insurance)
- • Arbeitslosenversicherung (Unemployment Insurance)
- • Pflegeversicherung (Nursing Care Insurance)
Nettogehalt (Net Pay)
Your take-home pay after all deductions. This is what gets transferred to your bank account.
Tip: Your payslip should show a "Brutto-Netto-Verhältnis" (gross-to-net ratio). In Germany, the employee typically covers about 20-22% of their gross salary in taxes and social contributions.
Calculate Your German Take-Home Pay
Now you understand how German income tax works, use our calculator to see exactly how much you'll take home based on your salary and circumstances.
Try the German Tax CalculatorThe information on this page is for general guidance only. Tax rules can change, and individual circumstances vary. For personalized tax advice, please consult a qualified tax professional or visit the official German Federal Ministry of Finance website.
Social Security Contributions
Germany has a comprehensive social security system. Employees and employers both contribute. The employee's share is deducted from their gross salary. Here are the main components:
Contribution Ceilings (Beitragsbemessungsgrenze)
Social security contributions are capped. Even if you earn more than the ceiling, you only pay contributions up to that limit. This means high earners pay a lower percentage of their total income in social security contributions.
Private vs Statutory Insurance
Above a certain income threshold (€69,750 in 2026), you can choose private health insurance instead of statutory (gesetzliche) insurance. Private insurance can be cheaper or more expensive depending on your situation, but it doesn't include unemployment or pension contributions from the employer.