About taxes in Germany

Germany uses a progressive income tax with a basic tax-free allowance ("Grundfreibetrag") of €12,348 in 2026. 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 an exemption threshold of €19,950 in income tax for single/Class 1 filers (€39,900 for jointly assessed Class 3), 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 1.8% for employees with children (2.4% for those without). Statutory health insurance ("gesetzliche Krankenversicherung") averages around 8.75% employee share including the supplementary rate, capped at the contribution ceiling of €5,812.50/month (2026). Above an annually indexed earnings threshold, employees may opt for private health insurance instead. 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.