The most important tax for employees in Germany is income tax. You pay income tax on all income in a calendar year – for you this will most likely be primarily income from employment. If you work for a company as an employee, you do not have to worry about income tax. Because your employer will automatically deduct income tax in the form of wage tax from your gross wages every month and transfer it to the tax office for you.
Your employer also transfers the solidarity surcharge to the tax office and – if you are a member of a religious community that collects church tax – also the church tax.
In addition, he has already deducted pension, health, nursing and unemployment insurance from your wages and paid. You can see how much your employer transfers to you and what your net salary is every month on your wages and salary slips.
After the end of a calendar year, you can have the state check whether you have paid too much wage or income tax. To do this, submit your income tax return to the tax office. The state can then use your information about the actual income and financial burdens to check whether you are entitled to a refund. It is generally worthwhile to fill out the tax return form: According to data from the Federal Statistical Office, nine out of ten taxpayers have received a repayment. On average, they got back almost 900 euros.
There are expenses that can reduce your tax burden. You also state this in the income tax return. These include, for example:
- Expenses for a job-related move, also from abroad
- Costs for applications from abroad
- Expenses for trips to work
- Private pension costs
Source: Make it in Germany – Einstandssteuer
The amount of income tax is not just based on income. The family situation is also taken into account when determining the taxable income. In order to be able to take this into account for the current month, not only after the end of the year, all taxpayers are divided into different wage tax classes:
- Tax class 1: If you are single and you do not have to pay the tax relief for single parents, you fall into tax class 1. The same applies to spouses or life partners and divorces who live permanently apart.
- Tax class 2: This class applies to single parents who are entitled to the relief amount for single parents.
- Tax class 3: Married or partnered employees can choose this tax class if a spouse or life partner is not working or earns significantly less. The other spouse or life partner is then classified in tax class 5.
- Tax class 4: If both spouses or life partners earn approximately the same amount, this tax class combination is cheaper.
- Tax class 4 with a factor: Married or partnered employees can apply for the entry of a factor annually. This takes into account the income tax that is likely to be paid jointly according to the splitting procedure. The monthly wage tax deduction then almost corresponds to the expected annual tax liability of the spouse or life partner.
- Tax class 5: Married or partnered employees whose spouse or life partner is classified in tax class 3 are classified in this income tax class.
- Tax class 6: It applies to everyone who has a second or further employment.
Source: Make it in Germany – Steuererleichterung
