5 Tips for More Net Income in Germany

A lot of expats are complaining about how much taxes and social security they have to pay in Germany. Our 5 tips will increase your net income with the same gross salary.


Having a little More Money is nice, right? You can even increase your Net Income In Germany without asking your employer. All without increasing your Gross Salary if you follow our 5 tips for more net income in Germany.

The difference between gross salary vs. net salary is without a doubt pretty tremendous on German payslips. Employees are paying up to 45% in income tax, social security, solidarity tax, church tax, public or private health insurance, public pension, unemployment insurance, long-term care insurance, and a lot more.

Consequently, increasing your gross salary is neither a good option for your employer nor for you as an employee. On average, if your employer increases your gross salary by 100€, he has to pay 120€ (because of his part of your social security contributions). You will receive only 50€ – 75€ depending on your income.

Good news for all employees: These deductions are not set in stone. They can be optimized if you know how to utilize our 5 tips for more net income in Germany. So you can increase your net income without asking your boss for a raise, without a huge effort, and of course without breaking the law.

Some of the following 5 tips to increase your net income in Germany might sound a little ridiculous or even stupid to you (they do so for us as well 😄), but we do not make these rules. We just want to educate you. The government creates the rules and you certainly do not want to get into a fight with Finanzamt or German social security (like public pension or health insurance).

Tip #1 for More Net Income in Germany: Capital-forming Benefits

Let us start with the smallest tip for more net income in Germany. It can result in up to 40€ more each month from your employer. Capital-forming benefits or “Vermögenswirksame Leistungen” in German (also VWL in short).

This is certainly one tip for more net income that not even a lot of German natives utilize. When you get up to 40€ capital-forming benefits each month, your employer pays money into some form of savings contract for you. The exact amount your employer will save depends on your company. So go ahead and simply ask your boss about your capital-forming benefits to increase your net income in Germany.

With capital-forming benefits, you do not just have a higher net income in Germany, you also invest money for your future. By law, there are various ways to invest your capital-forming benefits that might be limited by your employer. If your employer gives you complete freedom on how you want to invest your capital-forming benefits, feel free to reach out to us. We will help you find the best way to save and invest your capital-forming benefits.

Investment possibilities for your capital-forming benefits include:

  • Real Estate loan: Your employer can pay your 40€ per month directly to the bank you financed your property with. This does not work with every bank. That’s why it is important to choose a good bank for your financing that gives you options with your loan.
  • Bausparvertrag: Back in the day when there was a meaningful interest rate, a Bausparvertrag might have been a pretty good option to save money for your future real estate dream (e.g. future home). Nowadays these financial products offer hardly any interest rate. So it is probably the worst way to invest your capital-forming benefits.
  • Savings plan: This option allows you to Invest your capital-forming benefits in ETFs & Mutual Funds. The only downside is, that you can’t combine your savings account, for your capital-forming benefits, with your private brokerage account, which you might have already.
  • Company Pension (Level 2): While you have no legal right to receive capital-forming benefits from your employer to increase your net income in Germany, you have a legal right towards a company pension with at least a 15% employer match. The 40€ for your capital-forming benefits can also be combined with your company pension level 2 from your employer.

We believe that none of these investment options is generally the best for everyone. The best way to use your capital-forming benefits always depends on your personal situation. More precisely, your investment goals (like passive income), your financial situation, and many more factors.

Which way to invest is best for you? Let's find out together.

Tip #2 for More Net Income in Germany: Non-cash Benefits

The second tip for more net income in Germany comes from your employer as well. Instead of increasing your salary (which would be taxed of course), your employer can give you up to 44€ per month in non-cash benefits or Sachzuwendungen in German (that are completely free of tax and social security).

Please do not confuse non-cash benefits with cash benefits (in German Geldwerter Vorteil). Cash benefits, like a company car, are subject to income tax and social security. Non-cash benefits are free of tax and social security. Therefore they will increase your net income without increasing your gross salary.

Your employer has numerous possibilities to utilize these non-cash benefits and increase your net income in Germany.

  • Vouchers: Maximum 44€ per month for petrol, food, public transport, German course, etc… General vouchers for a gas station or Amazon are also possible. So that you can buy something else than actually intended (e.g. snacks instead of petrol).
  • Health promotion: Alternatively to the 44€ vouchers per month, your employer can also pay you up to 500€ per year. This is for anything that makes you more healthy and more productive. For example gym membership, back training, massages, yoga courses, nutritional seminar, stress relief).
  • Child care: This non-cash benefit comes with a couple of restrictions. Letting your employer pay (partly) for child care is only possible if he does not offer a company Kindergarten. If your child goes into a real Kindergarten or gets professional child care (no care at home by yourself). If your child is not at mandatory school age (depending on the state you live in). And only if you really have to pay for child care (some cities offer free child care).

Attention: If your employer pays you just 1 cent more than 44€ per month, the whole amount of non-cash benefits will be subject to tax and social security. It is also important that you cannot exchange the vouchers from your employer for cash.

Tip #3 for More Net Income in Germany: Optimize Your Health Insurance

Tip #3 for more net income has become the tip with the largest savings potential over the last years: Changing your health insurance. 2023 is the third year in which you can potentially pay more than 10.000€ in contributions for public health insurance. Small changes can save you a lot of money (e.g. higher cashback).

Option 1: Change within the Public Health Insurance System​

Germany has about 100 different public health insurance that offers 95% of the same benefits & coverage. As the government regulates the minimum amount of coverage for all German health insurance (Public & Private) in the German social code. You are free to switch back and forth between most public health insurance in order to increase your net income in Germany.

All Public health insurances charge 14,6% of your gross salary (up to a certain threshold that changes every year). On top of that, public health insurances charge an additional contribution. That ranges from 0,6% to 3,1% depending on the efficiency of the public health insurance company.

Changing from the most inefficient public health insurance in Germany with 14,6% + 3,1% = 17,7% contribution to the most efficient public health insurance in Germany with 14,6% + 0,6% = 15,2% contribution will save you 2,5% of your gross salary every single month. In 2023 that is 121€ in savings per month for basically the same health insurance benefits.

Option 2: Change from the public health insurance system to the Private Health Insurance System​

Employees in Germany earning above a certain threshold (66.600€ gross salary in 2023) or self-employed people have the freedom to change to the private health insurance system, as they are not forced by the German government to pay into public health insurance.

With this income, you are free to switch to the German private health insurance system. This will most likely save you a lot of money as you pay much less in contributions than in any public health insurance. Please note: All of your health insurance contributions (public or private) are paid 50% by your employer.

The decision about paying for public health insurance or private health insurance goes far beyond just financial reasons. Please do not switch to the private health insurance system just because you want to save some money. To help you form the right decision, here are some examples of factors to consider before making a move:

  • Age: The younger you are, the cheaper your premium for your private health insurance will be. That one does save money if one gets insurance later is a straight-up myth. The older you are while entering the private health insurance system, the more you have to pay in monthly premiums.
  • Health: Private health insurance is the hardest insurance to get into. Every insurance is asking you at least a questionnaire about your medical history. Some insurances even send you to a doctor to get a medical check. One has to be healthy in order to get private health insurance.
  • Family: Public health insurance can offer family insurance under certain circumstances. So that family members like children or non-working spouses are insured without paying a premium. In private health insurance, everyone has an individual contract. So if you have 3+ children, staying in public health insurance might be cheaper for you.
  • Location: Many expats living in Germany are staying here for just a couple of years. They are young, have a high gross salary, and plan to leave Germany within the next couple of years again. In this case, switching to private health insurance will save you an enormous amount of money every month.

For anyone that is free to choose, the decision between public health insurance or private health insurance is right for themselves is not an easy one. Let us find out together if public or private health insurance is right for you by setting up a free meeting with us by clicking the button below.

Is public or private health insurance better for you? Let's find out together.

Tip #4 for More Net Income in Germany: Leave the Church

The fourth tip for more net income in Germany without changing your gross salary is to leave the church. This tip might cost a little money upfront for filling out the paperwork. Nevertheless, it will save you a lot more money going forward as you do not have to pay church taxes anymore.

As Germany is pretty efficient in the way they deduct taxes, church tax is deducted straight from your payslip. Employees in Bavaria & Baden-Württemberg pay 8% church tax, all other German states charge 9% church tax. So for every 100€, you pay in income tax another 8€ or 9€ are deducted in church tax on top of income tax.

In order to leave the church and increase your net income in Germany, you simply have to fill out one piece of paper that you get either at your registry office or local court. Please check this website to see which authority is responsible in your district to handle church exits and entries.

Before leaving the church please note: Certain services from the church such as baptism or a wedding might cost money when you are not a member of the church anymore. In case you change your mind and want to be a member again, a re-entry is possible at any time.

Tip #5 for More Net Income in Germany: File Your Tax Return

Last but not least tip #5 to increase your net income in Germany is to file a tax declaration. Even though filing a tax declaration is not mandatory in Germany (at least most of the time), it is still financially worth it because 9 out of 10 people get on average 1.072€ of their tax money back.

So file your tax return instead of gifting the government money that is actually yours. There are multiple ways to file your tax declaration in Germany that are discussed below, but before, we have to clear the #1 tax Myth that might lead you to spend money just for tax purposes.

What does Tax-deductible mean in Germany?​

When you spend 1€ on something that is tax-deductible, you will get your personal marginal tax rate back from Finanzamt when filing your tax declaration. As your personal marginal tax rate is a maximum of 45%, you should never ever spend money on something just because it is tax-deductible. You will still have 55 cents of real costs on every Euro you spent.

What kind of costs are tax-deductible in Germany?​

The logic from Finanzamt for tax-deductible costs is always the same: When you spend money in order to make money in the future, these costs are tax-deductible (because you will make money going forward and therefore pay even more in taxes 😉). This logic works in many fields of personal finance: Work, PensionsReal Estate, etc. These costs are tax-deductible:

  • Advertising costs (Werbungskosten): These are by far the biggest costs that you can sum up to increase your net income in Germany. As there is no maximum for advertising costs, you can also have a tax loss that you can carry forward to the next year (if costs are higher than income). Examples: Travel to work, German course, laptop, etc.
  • Special costs (Sonderausgaben): These tax deductions amount to a large amount every year when you pay into German social security, German public pension, and German health insurance. You can also deduct the church taxes you paid or donations you made as well as private pensions in Level 1 or Level 2 of the German pension system.
  • Exceptional costs (Außergewöhnliche Belastungen): The last tax-deductible costs in Germany can be of various sorts. Exceptional costs can include medication, glasses, financial support for parents or children, costs for a funeral, etc. The higher your taxable income in Germany, the less likely a lot of exceptional costs will be accepted by Finanzamt.

How to do your tax declaration in Germany?​

  • Do it yourself: There are many different software solutions out there to file your Tax declaration yourself for very little money, some of them even in English. There is also an online software from the Bavarian Ministry Of Taxes that helps people all over Germany to file their taxes called Elster (Attention: Elster is quite complicated Tax Filing Software).
  • Tax association (Lohnsteuerhilfeverein): If you want professional help in filing your tax declaration and are employed in Germany. You can reach out to your local tax association. As this is most likely the cheapest option for employees to get their tax declaration done by somebody else, most tax associations have long waiting lists for employees.
  • Tax advisor (Steuerberater): By far the most professional way to get your taxes done in order to increase your net income in Germany. Pro tip: Choose a Tax Advisor that is paid in governmentregulated commissions (depending on your Taxable Income) instead of a tax advisor that is paid by the hour.

The every-so-often challenge in many fields of personal finance is that you don’t know what you don’t know. So while filing your taxes with (free) do-it-yourself online software might be the cheapest. You might miss out on a lot of tax deductions the Tax Association or a professional tax advisor might know. Paying some fees for their services is worth it if they can increase the money you get back from Declaring Your Taxes.

This article helped you save thousands of Euros every year. And we can save you a lot more!


Our 5 tips for more net income in Germany without increasing your gross salary helped you to save thousands of Euros every single year. An employee with an average German salary can easily save 3.000€ or 4.000€ per year when utilizing our 5 tips for more net income in Germany.

What to do with that money? Well, it is certainly not going to grow on its own. It is up to you to make the most of your financial situation. And we are here to help you do exactly that. As the #1 independent & English-speaking financial planner in Germany, we are committed to helping everyone towards a better financial future. 

Feel free to book a Free 30-minute Financial Consultation with us very conveniently with the calendar on our Meeting page if we can help you make the most of your financial situation.

14 thoughts on “Increase your net income – 5 Tips for more net income!”

  1. Pingback: Taxes on Investments - How to Invest in Germany

  2. Pingback: Passive Income In Germany

  3. Pingback: German Payslip: Employed Vs Self-employed

  4. Pingback: Income Tax in Germany Explained

  5. Pingback: German Pension Level 2

  6. Pingback: Legal Tax Tricks in Germany

  7. Pingback: Company Pension in Germany - 5 Types

  8. Pingback: German Tax Guide 2022

  9. Pingback: German Payslip Explained

  10. Pingback: Techniker Krankenkasse Exposed – What you need to know!

  11. Pingback: Deductions From Your German Payslip

  12. Pingback: How To Find The Right German Private Health Insurance

  13. Pingback: German Health Insurance - Private Vs. Public Insurance

  14. Pingback: Taxes for Expats Living in Germany

Leave a Comment

Your email address will not be published. Required fields are marked *

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

The reCAPTCHA verification period has expired. Please reload the page.