German Payslip Explained: A Complete Guide for Expats in 2025

Key Takeaways

Many expats in Germany are shocked by deductions—understanding your payslip helps track where your money goes.
Your tax class and insurance type strongly affect how much money ends up in your account.
Gross pay includes salary, bonuses, and tax-free benefits—ask your employer about available extras.
Income tax, church tax, and solidarity tax depend on your income and tax class—know your category well.
Social security takes a large chunk—pension, unemployment, health, and care insurance split with your employer.
Non-cash benefits and voluntary insurance can reduce your net salary more than you might expect.
Yearly figures show your real income and deductions—important for financial planning and tax returns.

You are currently viewing a placeholder content from YouTube. To access the actual content, click the button below. Please note that doing so will share data with third-party providers.

More Information

Unblock content Accept required service and unblock content

Introduction

Have you ever stared at your German payslip and wondered if someone was playing a prank on you? You’re not alone. For many expats in Germany, that first paycheck can be a rude awakening. The gross salary looked so promising on the contract — but the amount that actually lands in your bank account feels much smaller than expected. That’s because your German payslip hides a whole world of taxes, deductions, and contributions that can quickly shrink your earnings.

In this guide, we’ll break down every section of your payslip, so you can finally understand where your money is going. Whether you’re new in Germany or have lived here for years, understanding your payslip is essential to managing your finances, optimizing your tax situation, and even negotiating with your employer. So grab your most recent payslip, follow along, and let’s decode this document together.

Ready to see what’s behind all those mysterious line items and deductions? Let’s dive in.

1. Personal Information & Social Security Code: The Top of Your Payslip

Every payslip in Germany starts with a section filled with your personal and employment details. These might include your name, birthdate, tax ID, social security number, and start date with the company. While most of these are for reference only, there are two very important pieces of information you should always check here: your tax class and your health insurance status.

Your tax class (Lohnsteuerklasse) has a direct impact on how much income tax is withheld from your salary each month. If you’re single with no children, you’re likely in Class 1. If you’re married, or a single parent, your classification could be very different — and affect your net pay significantly.

Also located in this section is the BGRS code, which is crucial for understanding your social security obligations. This code tells you whether you’re enrolled in the public or private system and which types of contributions (pension, health, unemployment, care insurance) you’re responsible for. If you see four 1s (1111), you’re fully enrolled in the public system. Other combinations, like 0110 or 9111, may indicate a switch to private health insurance or optional enrollment.

This section might look boring at first glance, but trust us — it holds the keys to major deductions later on.

2. Gross Salary & Benefits: What's Actually Added to Your Payslip

Now comes the fun part — your earnings. This section lists everything your employer pays you, including your base salary, bonuses, holiday pay, overtime, and any other monetary or non-monetary compensation.

For example, if you receive a company car or a fitness membership through your job, those are included here as non-cash benefits (Sachbezüge). These perks are awesome — especially since some, like a €50 gym allowance, are tax-free. If you’re not getting any non-cash benefits from your employer, it’s worth having a chat with HR. A little perk like this can make a difference without affecting your tax burden.

This section shows the gross total — before any taxes or contributions are taken out. But keep in mind: even non-cash perks are treated as income and can increase your tax and social security payments. They’re added here so the government can calculate how much of your salary should be taxed. More on that in the next sections.

At a glance, this part makes your pay look great. But don’t get too excited — the next few lines will take a big bite out of it.

3. Taxes in Germany: Income, Church, and Solidarity Tax

This section of the payslip often delivers the biggest shock. Why? Because this is where you see how much tax you actually pay. For most employees, this includes three possible taxes:

Income tax (Lohnsteuer) – Applied if your income is over roughly €1,500/month.
Church tax (Kirchensteuer) – Only if you’re officially a member of a church. Not religious? You can opt out at your local Bürgeramt or Standesamt.
Solidarity surcharge (Solidaritätszuschlag) – Only applies if your monthly gross income is above €8,000.

The tax class mentioned earlier determines the percentage you pay. For instance, Tax Class 3 (typically one spouse in a married couple) enjoys lower deductions, while Class 5 (the other spouse) sees much higher ones. Classes 1 and 2 are common for single individuals, with Class 2 offering small advantages to single parents. If you have multiple jobs, you’ll also face Tax Class 6 — the most expensive one.

Surprisingly, you’re probably not paying as much tax as you think. The myth of a 42% tax rate applies only to extremely high incomes. According to the German Statistical Office, the average employee earns €4,634/month and pays just around 15% in taxes. So while it may feel like a lot is taken, the truth is more forgiving — especially if you use smart deductions and tax-saving tips.

4. Social Security Contributions: What You and Your Employer Pay

Germany’s social safety net is strong — but it’s funded through mandatory contributions from both employers and employees. This section details how much you pay for the four major components of social security:

Public pension insurance (RV) – 18.6% of gross salary, split 50/50
Unemployment insurance (AV) – 2.6%, also split 50/50
Public health insurance (KV) – Between 16.44% and 19%, depending on the provider
Care insurance (PV) – Around 4.2% (depending on family situation), again split in half

There are caps on how much of your salary is subject to these percentages. For pension and unemployment insurance, contributions apply only up to €8,050 gross. For health and care insurance, the cap is €5,512.50 gross.

Your payslip shows both the total amount subject to these deductions and your personal share. It can feel like a lot — in many cases, over €1,200/month just for public health insurance. This is also one area where you can optimize. If you earn more than €6,150 gross per month and are relatively healthy, you may qualify for private health insurance, which could lower your contributions.

Social security ensures you’re protected in tough times, but understanding your options can help you save big over time.

5. Net Salary and Hidden Deductions: What You Really Get Paid

After all the deductions, we finally reach the most important number on your payslip — your net salary. But even this figure can be a little misleading. That’s because some benefits that were added to your gross income in Section 2 (like company cars) are taxed and then deducted again here. It’s a strange system — you’re taxed on a benefit you don’t receive as cash, so they subtract it back out here.

You’ll also see additional deductions here if you are “voluntarily insured” — meaning you opted for public health insurance even though you qualified for private. In these cases, health insurance contributions may show up here instead of in Section 4.

The final line of this section is the amount you actually receive in your bank account. In the example from the video, the gross salary was €4,400, but only €2,898 was paid out — a 34% deduction. It’s a stark reminder that gross salary isn’t everything. Your real spending power is based on net income.

And if you want to check your year-to-date totals, look at Section 6 on the right side of the payslip. It shows all the same categories — but tallied since the beginning of the calendar year or since you started with the company.

Conclusion

Understanding your German payslip isn’t just about satisfying your curiosity — it’s about empowering yourself financially. When you know exactly where your money is going, you can make smarter decisions about your taxes, benefits, insurance options, and even job negotiations.

From checking your tax class to optimizing your health insurance or asking for non-cash perks, there are plenty of ways to increase your net salary without changing your job. And once you’re aware of the deductions, you can use that information to start optimizing — whether through professional tax advice, voluntary deductions, or switching to a more efficient insurance setup.

So next time you receive your payslip, don’t just glance at the bottom line. Take a minute to go through each section — and see how much more control you actually have over your income.