Germany Tax — Lohnsteuer, Steuerklassen, and Soli
Germany's taxes are administered jointly by the federal government, states, and municipalities, but for individuals the most important taxes are income tax (Einkommensteuer) and its withholding form wage tax (Lohnsteuer). The rate is progressive, starting at 0% on income up to the basic allowance (Grundfreibetrag, around EUR 12,096/year as of 2026; subject to change) and reaching 45% (the top "wealth" bracket). When you arrive in Germany, the tax office (Finanzamt) automatically issues you a Steuer-ID (tax identification number) — this number is the master key for health insurance, employment, child benefit, and basically every administrative process.
The main items at a glance
- Einkommensteuer (income tax): progressive 0%–45%; applies above the basic allowance.
- Lohnsteuer (wage tax): withheld from your salary by the employer. The annual tax return (Steuererklärung) reconciles refunds and back-payments.
- Solidaritätszuschlag (solidarity surcharge, "Soli"): 5.5% of income tax. Since 2021, about 90% of taxpayers are exempt; only high earners still pay it.
- Kirchensteuer (church tax): registered Catholics, Protestants, and other recognised denominations pay 8–9% of income tax (varies by state). Leave the religion field blank at Anmeldung and you won't be charged.
- Social insurance contributions (Sozialabgaben): health (about 14.6% + supplement), pension (18.6%), unemployment (2.6%), long-term care (about 3.4%) — split equally between employer and employee.
Steuerklassen (tax classes) 1–6
These adjust withholding rates based on marital and family status. You can change class on marriage, divorce, or birth of a child.
- I: single, divorced, or separated without children (most foreign singles).
- II: single parent (lives alone with children, extra deduction).
- III: higher-earning spouse (paired with a IV/V partner) — lowest withholding.
- IV: both spouses earn similar amounts.
- V: spouse of a III holder (highest withholding).
- VI: second job (Nebenjob).
Couples where both work can choose between III/V and IV/IV with factor (Faktor), and can switch each year (German residence + registered marriage required).
What foreigners should know
- Steuer-ID: automatically mailed within 2–4 weeks after Anmeldung. If lost, request reissue at BZSt.
- Tax residency (unbeschränkt steuerpflichtig): more than 183 days in Germany or your main home there means worldwide income is taxable. Below that, only German-source income.
- Germany–Korea tax treaty: prevents double taxation. Check the treaty for which side taxes Korean rental income or pensions.
- Spousal splitting (Ehegattensplitting): married couples can combine and halve income for the progressive scale — a big saving for single-earner households.
Things to watch
- Casually entering "Katholisch" or "Evangelisch" on the religion field means church tax every month. To stop it, you must formally leave the church (Kirchenaustritt) — this costs EUR 25–60 at the registry office.
- Filing deadline: self-employed and people with multiple income sources must file by 31 July of the following year. Using a tax adviser extends this by 12 months.
- Electronic filing via the ELSTER portal is the standard; English support is partial.
Official guidance: Bundeszentralamt für Steuern (BZSt), ELSTER portal