The German tax class system helps account for individual circumstances when calculating monthly wage tax. Here, we explain everything you need to know about tax classes – clearly and understandably.
- Why do tax classes exist?
- Basics about tax classes
- What tax classes are there and who are they for?
- How does the tax office know my tax class?
- How do I find out my tax class?
- Can my tax class be changed?
- What happens if I have the wrong tax class?
- How does a tax class change during the year affect me?
- How do tax classes affect net income?
- What role do tax classes play in mini-jobs?
- How does my tax class relate to my spouse?
- Can I work without a tax class?
Why do tax classes exist?
Tax classes were introduced to adjust wage tax to different life situations and simplify monthly tax deductions. They also provide employers with a standard basis for payroll accounting.
ℹ️ Basics about tax classes
Your tax class only affects the calculation of your monthly wage tax, which is directly paid by your employer to the tax office. In your tax return, the tax class serves only as informational data. Your final tax burden is calculated independently of your tax class. Any wage tax paid in advance is credited in your tax return, and the final tax result is determined based on your income, allowances, deductions, and expenses.
What tax classes are there and who are they for?
- Tax Class I: For single, divorced, or widowed individuals without children.
- Tax Class II: For single parents with at least one child living in their household. This tax class also includes an additional relief allowance for single parents.
- Tax Class III: For married or registered partners when one partner earns little or no income, and the other opts for Tax Class V.
- Tax Class IV: For married or registered partners earning roughly the same income.
- Tax Class IV with Factor: A variation of Tax Class IV that better accounts for each partner's tax burden.
- Tax Class V: For married or registered partners when the other partner is in Tax Class III.
- Tax Class VI: For employees with multiple jobs; applies to the second and any additional jobs.
How does the tax office know my tax class?
Your tax class is automatically assigned by the tax office based on your marital status and personal circumstances. Changes such as marriage or the birth of a child are also reported automatically by the civil registry office.
How do I find out my tax class?
Your tax class is listed on your wage tax certificate. If you’re filing your tax return with the Taxfix app, simply enter it under the "Income" section. If you changed your tax class during the year, enter the tax class listed on your most recent wage tax certificate. The app automatically identifies if you've overpaid taxes based on the data in fields 3 and 4 of your wage tax certificate(s) and adjusts your tax result accordingly.
Can my tax class be changed?
Yes, it can be changed in cases such as marriage, separation, or changes in income. Married couples can change their tax class combination once a year. This must be done by November 30 for the current tax year. In most federal states, you can request a change online via the “Mein ELSTER” portal, or you can submit the form directly to the tax office.
What happens if I have the wrong tax class?
If you’ve been assigned the wrong tax class, notify the tax office as soon as possible. Adjustments can be made at any time. Any overpaid taxes will be automatically credited when you file your tax return.
How does a tax class change during the year affect me?
When you change your tax class mid-year, the change takes effect the following month. Previously paid taxes are not adjusted retroactively. The final reconciliation occurs when you file your tax return, which accounts for all taxes paid throughout the year.
How do tax classes affect net income?
Your tax class affects your monthly tax deductions, but your final net income is determined only after filing your tax return.
What role do tax classes play in mini-jobs?
Tax classes do not apply to mini-jobs (up to €520 per month) since these are taxed at a flat rate. However, for an additional job that exceeds this limit, Tax Class VI applies.
How does my tax class relate to my spouse?
If you’re married or in a registered partnership, your tax class can be combined with your partner’s (e.g., III and V or IV and IV with Factor). This impacts the monthly tax deductions for both partners.
The combination of Tax Classes III and V is used by couples where one partner earns significantly more than the other. The higher earner pays less wage tax, while the lower earner has higher deductions. There are considerations to phase out this combination and replace it with IV/IV with Factor. Current plans suggest this may be implemented starting from the 2030 tax year.
Can I work without a tax class?
No, every employee needs a tax class as it is the basis for calculating wage tax. If no tax class is assigned, you will be temporarily placed in Tax Class VI, which results in higher tax deductions.