These payments are usually shared between you and your employer, with your employer typically contributing 50%. Your share of contributions will be withheld from your salary and transferred to the relevant organisations. The total contribution for social security generally amounts to around 20 - 22% of your salary up to a specified maximum limit.
Benefits in kind (geldwerter Vorteil)
You may also be obliged to pay tax on anything deemed a “benefit in kind” - that is, perks or benefits you receive from your employer, such as the use of a car. Company cars are taxed at 1% of the car’s list price, including VAT. Shares given as perks or bonuses are also subject to taxes.
Solidarity surcharge (Solidaritätzuschlag)
Often called “Soli” for short, this 5,5% tax supplement is payable on income tax, capital gains and corporation taxes. It was initially introduced in 1991 to cover the costs of German reunification, for instance paying the pensions and debts of the former East German government.
As of January 2021, the "Soli threshold" for income tax has been dramatically increased, essentially abolishing the solidarity surcharge for 90 percent of taxpayers. Single persons will only pay the solidarity surcharge if their total income tax bill in 2025 amounts to 19.950 euros or more.
Church tax (Kirchensteuer)
When you register in Germany, you are asked to declare a religion. If you declare yourself Protestant, Catholic or Jewish you are liable to pay the church tax, which the tax office collects on behalf of religious organisations in Germany. It is currently 8% in Bavaria and Baden-Württemberg and 9% in all other federal states. If you have no declared religion, you will not pay church tax.
German tax classes (Steuerklasse)
There are six different tax classes in Germany. Which tax class (Steuerklasse) you are in affects the amount of income tax you pay.
What is my tax class?
The tax classes are as follows:
- Class I: Single, widowed, divorced or (permanently) separated employees, or married people whose spouses live in a non-EU country.
- Class II: Single people who are entitled to the single parent allowance (i.e. you have one child living in your household for whom you receive child benefits).
- Class III: People who are married or in a civil partnership, and whose partners earn significantly less than them.
- Class IV: People who are married or in a civil partnership, and both partners earn an equal income.
- Class V: People who are married or in a civil partnership, and who partners earn significantly more than them.
- Class IV: Employees who work for more than one employer simultaneously and receive multiple salaries.
The tax classes are most important for married couples, as tax classes III and V represent a way for couples with unequal salaries to save money on their overall tax bill. If you have recently got married, you and your spouse will automatically be put in tax class IV.
Changing your tax class in Germany
It is possible to change your tax class (for instance if you were automatically placed in tax class IV by the tax office and you earn significantly more or less than your partner). You can change your tax class if you are:
- Married or in a registered civil partnership
- A single parent
You can apply for a change of tax class either online via ELSTER, or by filling out the appropriate form, signing it and sending it to your local tax office. As of 2025, the application to change tax class has been integrated into the form “Application for income tax reduction” (Antrag auf Lohnsteuer-Ermäßigung).
Changes to married couples tax classes
The federal government previously announced its intention to abolish tax classes III and V by the end of 2029. However, this policy has been taken off the table since the collapse of the government in autumn 2024.
German tax calculator
If you're struggling to visualise how all of this affects your income, a German tax calculator can give you a good idea of how much money you'll actually take home each month. To get an idea of how much income tax you will have to pay, you can use this income tax calculator.
Annual tax return (Steuererklärung)
At the end of the financial year (which in Germany runs from January to December), you can submit a tax return to the Federal Central Tax Office to make sure you have been paying the correct amount of tax.
On the basis of the figures you and your employer supply, the tax deductions you claim, and the amount of income tax you have paid in the previous year, the tax office will determine whether you are entitled to a refund or need to pay more. You can complete the forms on paper and submit them to the tax office, or do them using the online tax office system ELSTER (Elektronische Steuererklärung).
To find out whether you are required to submit an annual tax return, what deductions you can make to save money, and how the application process works, visit our Annual tax return page.
Business taxes in Germany
Alongside regular income tax, the Federal Central Tax Office also imposes taxes on business income. Whether you pay VAT and corporation tax, and the amount you pay, depends on the size of your business and your annual turnover.
If you are thinking of starting your own business in Germany, a good accountant is essential to make sure you pay the correct taxes. On our Business taxes page, you can find an overview of the different types of taxes you might need to pay as an entrepreneur.
Other taxes in Germany
You will encounter many other forms of direct and indirect taxation as an expat in Germany. This might include:
Licence fee (Rundfunkbeitrag)
Since 2013, every household in Germany has been required to pay the TV and radio licence fee (Rundfunkbeitrag), regardless of whether you own a TV or a radio. The rationale behind this is that in the modern world you can still access content via a computer or a phone. As soon as you register your address in Germany, you will most likely receive a letter from the Beitragsservice requesting payment. It costs 18,36 euros per household per month (as of 2025), no matter how many people are living there. You may be eligible for reduced payments or exempt if you receive benefits, are disabled, or are a student.
Motor vehicle tax (Kraftfahrzeugsteuer)
This kind of tax will apply to you if you own a car. The tax depends on fuel type and engine size. Vehicles first registered before June 30, 2009, are taxed according to their emission class. Vehicles registered after that date are taxed based on their carbon dioxide emissions. You can find out more on our Taxing a car in Germany page.
Dog tax (Hundesteuer)
If you own a dog in Germany, you are required by law to register it at your local tax office, where it will receive a tag (Hundemarke) confirming you have paid the licence. This usually costs somewhere between 90 to 150 euros per year for the first dog. The tax is higher for any additional dogs, to deter owners from having too many pets. Services dogs, such as guide dogs, are exempt, as are other pets.
Property sales tax (Grunderwerbsteuer)
You will be liable to pay a property sales tax if you are buying a house in Germany. This one-off tax applies when a property valued at more than 2.500 euros is transferred from one owner to another. The rate varies between federal states, from 3,5 to 6,5% of the property’s value.
Capital gains tax in Germany (Abgeltungsteuer)
This type of tax applies to income made from capital like dividends, interests, income from investment funds, and private capital gains like sales of shares or stakes in companies. The capital gains tax in Germany is currently a flat rate of 25%.
Inheritance and gift tax (Erbschafts- und Schenkungssteuer)
If you are a taxpayer in Germany, or you are the beneficiary of a German taxpayer, you will be taxed for any assets you may receive. The tax rate varies from 7% to 50%, depending on the value of the inheritance.
Real property tax (Grundsteuer)
This tax is imposed by municipalities on properties in Germany. The amount of tax payable is calculated on the value of the property and the local tax rate (which varies from 0,26% to 1%)
Double taxation agreements
Double taxation agreements ensure that nobody has to pay tax on the same income twice. Technically, it would be possible for someone to be liable to pay tax in two countries - for example, if you’re a cross-border commuter.
Germany has double taxation agreements with multiple countries worldwide. You can see a full list of countries on the Federal Tax Office’s website. This means that income earned worldwide will be used to calculate your tax bracket and the amount of tax to pay on income in Germany. You will not be taxed by the German tax authorities on income earned elsewhere that has already been taxed.
If your country doesn’t have a double taxation agreement with Germany, you may be able to claim instead for a foreign income tax credit, which allows you to claim the foreign income tax you’ve paid against your German income tax bill. A tax consultant can help you with this process.
German tax penalties
If you file or pay your taxes late, fail to file your tax declaration or fail to declare income, you risk a hefty fine of up to 50.000 euros. You could also face a prison sentence.