Tax classes and wage tax

In short: The tax class determines how much wage tax is withheld from the salary each month. It does not change the final tax burden of the year, only its distribution during the year. The exact settlement happens only with the tax return.

In more detail: Employers withhold wage tax as an advance payment on income tax and pay it to the tax office.

In Depth

• Class I: Singles, divorced, widowed (after the grace year). Class II: Single parents with a relief amount. Classes III and V: Married couples where one person is taxed under III (low deduction) and the other under V (high deduction). Class IV: Married couples with similar incomes, each treated as under I. Class VI: Second and side jobs.
• Factor method (IV with factor): Divides the splitting benefit more fairly between both, without III/V.
• Effect: With III/V the person in III gets more net each month, the one in V less. The couple pays the same tax over the year, but a back payment is possible if too little was withheld. Wage-replacement benefits (parental allowance, unemployment benefit I) are also calculated from net pay, which influences the choice. Calculate before choosing.
• Other deductions: Social-insurance contributions, church tax, solidarity surcharge (now only for high incomes). See payslip.
• Allowances: Allowances can be entered on the electronic wage-tax data (ELStAM), for example for high work-related expenses or children.
• Switching: The choice of tax class can generally be changed, with deadlines and restrictions. The employer retrieves the data electronically.
• Tax ID: Every person has a lifelong tax ID (tax number and tax ID).

See also: tax return for employees

General information on the legal situation in Germany, not legal or tax advice. Rules and amounts change; in an individual case ask advice centres, a notary, a tax adviser or the authorities.