How a German payslip works
An employee in Germany sees two groups of deductions. The first is tax: wage tax (Lohnsteuer), the solidarity surcharge (Solidaritätszuschlag) and, for members of a tax-collecting church, church tax (Kirchensteuer). The second is social insurance (Sozialversicherung): pension, unemployment, health and long-term care insurance. The employer withholds all of it and pays its own contributions on top. The calculator above reproduces the official wage-tax program of the Federal Ministry of Finance for the tax year shown and applies the statutory contribution rates and ceilings for that year.
Wage tax and tax classes
Wage tax is income tax collected at source. The employer does not know your full financial picture, so the law prescribes a standard calculation: from the yearly gross it deducts a flat employee expense allowance, a small special-expenses allowance and a deemed insurance deduction (Vorsorgepauschale) that approximates your own social insurance contributions. What is left is taxed with the progressive income tax tariff, which starts at zero below the basic tax-free amount and rises through several zones to the top rate.
Your tax class (Steuerklasse) tells the employer which of six variants of that calculation to run:
- Class I for single, divorced or widowed employees without children in the household.
- Class II for single parents, which adds the single-parent relief amount.
- Class III for a married person whose spouse earns much less or nothing; it applies the splitting tariff, which roughly halves the taxable amount, taxes it and doubles the result.
- Class IV for married couples with similar incomes; each spouse is taxed like a single person.
- Class V for the lower-earning spouse of someone in class III; almost no allowances apply, so the withholding is high.
- Class VI for a second or further job, with no allowances at all.
Married couples can choose between IV/IV and III/V. The combination only changes how much is withheld during the year; the joint tax assessment afterwards settles the final amount, and III/V usually leads to a tax return being mandatory.
Child allowances, solidarity surcharge and church tax
Registered child allowances (Kinderfreibeträge) do not reduce the wage tax itself during the year, because the child benefit (Kindergeld) already covers that. They do reduce the base on which the solidarity surcharge and church tax are calculated. Enter the counter shown on your payslip or tax-deduction record; class IV parents typically have a full counter per child, other classes half or full depending on the situation.
The solidarity surcharge is a percentage of the wage tax, but since its reform most employees no longer pay it: it only applies once the yearly wage tax exceeds an exemption threshold, and above that threshold it phases in gradually before reaching its full rate. In class III the threshold is doubled.
Church tax is levied on members of the Catholic and Protestant churches and some smaller communities. Its rate depends on the federal state where you live: Bavaria and Baden-Württemberg use a lower rate than the other states. It is calculated on the same reduced base as the solidarity surcharge and is fully deductible in the annual tax return.
Social insurance contributions
Contributions are a fixed percentage of gross pay up to a ceiling (Beitragsbemessungsgrenze); income above the ceiling is contribution-free. There are two ceilings: one for pension and unemployment insurance, and a lower one for health and long-term care insurance. That is why the deductions stop growing proportionally once a salary passes those points, and why the effective rate curve flattens for high earners.
- Pension insurance is split equally between employee and employer.
- Unemployment insurance is also split equally and uses the pension ceiling.
- Health insurance combines a general rate, split equally, with an additional rate (Zusatzbeitrag) that each insurer sets for itself and that is also shared equally. The calculator defaults to the official average additional rate; enter your insurer’s rate for an exact figure.
- Long-term care insurance is split equally, except that childless members above a certain age pay a surcharge alone, parents with two or more children below the statutory age limit receive a discount per child, and in Saxony employees carry a larger share than employers because the state kept a public holiday when the insurance was introduced.
The employer’s half of each branch is shown in the employer section of the result. Together with the gross salary it is the real cost of the job to the company; further employer-only levies for accident insurance and pay-continuation funds are not included.
What this calculator assumes
The result models the standard case: an employee with regular monthly pay who is compulsorily insured in all four branches of statutory social insurance, without pension income, without an age relief amount and without an individual tax-free allowance registered with the tax office. It does not cover the following, and the real withholding will differ in these cases:
- Private health and care insurance, where the deemed insurance deduction is based on your actual premiums.
- The factor method (Faktorverfahren) for married couples in class IV.
- One-off payments such as bonuses or a thirteenth salary, which are taxed as other remuneration (sonstige Bezüge) under a separate calculation.
- Mini-jobs and the transitional zone (Übergangsbereich) for low monthly pay, where employee contributions are reduced by a statutory formula. The calculator warns when a salary falls in that range.
- Employees who are exempt from statutory pension insurance, for example some civil servants and members of professional pension schemes.
Withholding versus your final tax bill
Wage tax is a prepayment. After the year ends you can, and in some cases must, file an income tax return. The assessment adds up all income, replaces the flat allowances with your real deductible expenses where they are higher, applies the child allowance if it beats the child benefit, and credits the wage tax already paid. Most employees who file receive a refund; couples in classes III/V and people with other income may owe additional tax. Use this page to plan your monthly budget, and a tax return calculation to plan the year.