Taxes in Germany

In Germany, you have to pay a progressive tax rate. This means that your personal tax rate increases as your income rises. The beginning of the income tax rate is in the zero zone, the basic tax-free amount (10.347€ in 2022). No income tax is due here. After that, the income tax rate starts at 14% and goes up to 42%, which starts at an income of 58.827€. This 42% applies up to an amount of 277.826€. From here the top tax rate of 45% on your income starts.

The tax system in Germany works similarly to how it does in other, westernized countries. You are required to pay income taxes. This is automatically deducted from your payslip by your employer on a monthly basis throughout the year. Afterwards, a tax declaration is typically filed, or adjustments are made to reconcile any discrepancies.

1. Capital-forming Benefits
2. Non-cash Benefits
3. Optimize your health insurance
4. Leave the church
5. File your tax declaration

You can find an exact explanation in our article or YouTube Video.

1. Single, separated/divorced, widowed
2. Single parent, living separately
3. A married person with high income (spouse has to be 5)
4. A married couple with equal/similar income
5. A married person with no or low income (spouse has to be 3)
6. 2nd job or part-time

For some groups in Germany, filing a tax return is mandatory. These are self-employed and freelancers. It is also mandatory for you, if you are an employee and are in tax class 3, 4, or 5, you have divorced and remarried in the same year, additional income or salary replacement income over 450€, more than one employer in the same year, or with more than two salaries. For the other areas it is not obligatory, but can be useful, since 9 out of 10 people get on average 1.072€ back in taxes.

In Germany, no tax burden applies up to an annual income of €10.347 (in 2022). This is called the zero zone. After that, the lower progression zone begins, starting at 10.348€ and ending at 14.926€. The tax burden is 14% – 24%. The middle progression zone runs from 14.927€ to 58.827€ with a tax burden of 24% to 42%. The upper progression zone, with a tax burden of 42%, runs from 58.828€ to 277.826€. Then the proportional zone starts from 277.827€ with an annual tax burden of 45%.

When you deduct something for tax purposes in Germany, you will get your personal tax rate back by filing a tax declaration. In concrete terms, this means that you do not get back the total amount of your expenditure, but only a part. For example, if you have a personal tax rate of 42%, you will get back this percentage of your expenses. This means, if you spend 100€, you will get 42€ in tax refunds, provided you file a tax return. Thus, you should not spend your money unnecessarily just because you can deduct something from your taxes.