About taxes in Germany

Germany uses a progressive income tax with a basic tax-free allowance ("Grundfreibetrag") of €11,784 in 2025. Above that, rates rise from 14% to 42%, with a top "rich tax" of 45% on income above €277,825. Your tax class ("Steuerklasse") strongly affects monthly withholding: single employees are class 1; married couples often elect class 3/5 (higher earner pays less, lower pays more) or class 4/4 for balance. A solidarity surcharge of 5.5% on income tax applies above the exemption threshold, and church members ("Kirchensteuer") pay 8% (Bavaria, Baden-Württemberg) or 9% (other states) on top of income tax. Mandatory social contributions are split with the employer: pension 9.3%, unemployment 1.3%, and long-term care 1.7% (employees with no children pay an extra 0.6%). Statutory health insurance ("gesetzliche Krankenversicherung") averages 8.15% employee share including the supplementary rate, capped at the contribution ceiling of €5,175/month. Above the income threshold of €69,300/year, employees may opt for private health insurance. Annual reconciliation through the tax return often produces refunds — particularly for class 5 partners or those with deductible expenses such as commuting, childcare, or work-from-home costs.