Tax Classes in Germany in 2026: Rates and Rules

In Germany, there are six tax classes (Steuerklasse) that determine how income tax is withheld from an employee’s salary. The choice of tax class depends on marital status, whether the employee has children, and the number of jobs held. In 2026, the tax-free allowance is 12,348 euros per year, and the maximum income tax rate is 45%. We’ll explain which tax classes are in effect in Germany, how much tax foreigners pay, which option is best for different family situations, and how to change your Steuerklasse.

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What is a tax class (Steuerklasse) and how does it affect your salary in Germany?

A tax class (Steuerklasse) is the category used by an employer to calculate the monthly income tax (Lohnsteuer) withheld from an employee’s salary in Germany. The tax class takes into account marital status, the presence of children, eligibility for certain benefits, and the number of jobs held.

In Germany, two main terms are used to calculate salary:

- Bruttogehalt (gross) – salary before taxes and social security contributions are deducted

- Nettogehalt (net) – the amount the employee actually receives in their bank account after all mandatory deductions

For example, two employees with the same gross salary of 3,500 euros may receive different net amounts due to differences in tax classes, insurance contributions, and personal circumstances.

It is important to understand that the tax class primarily affects the amount of monthly tax withholdings, not the final annual tax amount. The latter depends on total taxable income, allowable deductions, marital status, and the method of joint taxation for married couples.

At the end of the year, the tax office (Finanzamt) may perform a final calculation based on the income tax return (Einkommensteuererklärung). If an employee has overpaid taxes during the year, they may receive a refund. If insufficient taxes were withheld, an additional payment will be required.

In our previous article, we discussed how to start a business in Germany: a detailed guide for foreigners.

What payroll taxes apply in Germany in 2026?

In 2026, income tax in Germany is calculated on a progressive scale: the higher the taxable income, the higher the rate applied to the corresponding portion of that income. In addition to income tax, contributions for health insurance, pension, and other types of social insurance are withheld from employees’ salaries.

Income Tax Rates in Germany in 2026

According to § 32a of the Income Tax Act (EStG), the following rates apply to individuals in 2026:

- Up to 12,348 euros per year – 0%, income within the tax-free allowance

- From 12,349 to 17,799 euros – a progressive rate starting at 14%

- From 17,800 to 69,878 euros – a progressive rate that gradually increases to 42%

- From 69,879 to 277,825 euros – top rate of 42%

- From 277,826 euros – top rate of 45%

These thresholds apply to an individual’s annual taxable income. For married couples filing jointly, the Ehegattensplitting mechanism applies, under which tax is calculated using a special formula based on combined income.

Important: The 42% or 45% rate does not apply to the entire salary. The higher rate applies only to the corresponding portion of taxable income.

Social Security Contributions and Additional Taxes

In addition to Lohnsteuer, employees in Germany pay mandatory social security contributions. In 2026, the basic rates are as follows:

- Pension insurance (Rentenversicherung) – 18.6%, of which the employee typically pays 9.3%

- Health insurance (Krankenversicherung) – 14.6% plus an additional contribution from the health insurance fund. The official average additional rate in 2026 is 2.9%. Typically, the employee and employer split the contributions equally

- Unemployment insurance (Arbeitslosenversicherung) – 2.6%, with the employee’s share being 1.3%

- Long-term care insurance (Pflegeversicherung) – 3.6%. For childless employees aged 23 and older, the total rate is 4.2%. The distribution of contributions is subject to specific rules, particularly in Saxony

Additionally, a church tax (Kirchensteuer) of 8% or 9% of the income tax amount may be withheld for members of the respective religious communities, as well as a solidarity surcharge (Solidaritätszuschlag) of up to 5.5% of the tax liability. The latter, following the introduction of a higher exemption threshold, primarily affects high-income taxpayers.

Note that social security contributions are assessed only up to established income limits. In 2026, these limits are 5,812.50 euros per month for health and long-term care insurance and 8,450 euros for pension and unemployment insurance.

As a general rule, the same rates apply to foreign workers as to German citizens, provided they are subject to German taxation and the social insurance system. The specific amount of deductions depends on income, tax status, insurance coverage, and personal circumstances.

Learn more about taxation for foreigners in Germany in 2026 by following the link.

The Six Tax Classes in Germany and Who They Apply To

In 2026, there are six tax classes (Steuerklasse I–VI) in Germany. Each has its own rules for calculating monthly income tax. The same categories apply to foreigners as to German citizens, but eligibility for a specific class depends on tax status and family circumstances.

Tax Class I – for unmarried employees. This applies to single people, divorced individuals, most employees who live permanently apart from their spouse, and widowers after the end of a special grace period. This is the standard class for foreigners working in Germany who do not qualify for another category.

Tax Class II – for single parents. Intended for employees who are raising a child on their own and meet the conditions for the tax credit Entlastungsbetrag für Alleinerziehende. In 2026, this amounts to 4,260 euros per year for the first child and an additional 240 euros for each subsequent child. This reduces taxable income, rather than the tax amount itself.

Tax Class III – for married couples who meet the relevant tax requirements. It is typically chosen by the partner with the higher salary if the other partner moves to Class V. Class III results in lower monthly withholdings. It may also apply to widowers during the year following the death of their spouse, subject to conditions established by law.

Tax Class IV – for married couples. The standard class for married employees who do not live permanently apart and meet the tax requirements. Most often, the IV/IV combination is used by partners with roughly equal incomes. An IV/IV option is also available with a multiplier that accounts for the difference in earnings during monthly withholdings.

Tax Class V – for the second spouse in a III/V combination. It applies when one spouse chooses Tax Class III. Under tax class V, payroll deductions are usually significantly higher, so the employee receives a lower net pay. The couple’s final tax burden is determined based on the results of the annual tax assessment.

Tax class VI – for a second and subsequent jobs. It is used when an employee receives pay from multiple employers at the same time. Tax Class VI is usually applied to additional jobs, which does not provide for standard tax deductions during Lohnsteuer withholding. At the same time, income from a Minijob may be taxed under separate rules under certain conditions.

Important! Foreigners cannot arbitrarily choose any tax class. The tax authority determines the available categories in accordance with the law.

A change in tax class is possible only if there are valid grounds.

In our previous article, we discussed the cost of living in Germany in 2026.

Which tax class is the most advantageous in Germany in 2026?

The most advantageous tax class in Germany depends on marital status, the difference in spouses’ incomes, and financial priorities. Class I is typically applied to unmarried employees, while three main combinations are available for married couples: III/V, IV/IV, and IV/IV with a multiplier.

Tax Class III/V – when one spouse earns more

The III/V combination is often chosen by families in which one partner has a significantly higher salary or the other is temporarily unemployed. The employee in Tax Class III receives a higher net amount because less income tax is withheld from their salary each month. At the same time, the partner in tax class V faces higher withholdings.

For example, if one spouse earns 4,000 euros gross per month and the other earns 1,500 euros, the III/V combination can increase the primary breadwinner’s monthly net income.

However, this arrangement has a drawback: if insufficient tax was withheld during the year, the family will have to pay the difference after filing their annual tax return.

Tax Class IV/IV – when spouses have roughly equal incomes

The IV/IV combination is automatically applied to spouses who meet the established conditions. It is best suited for situations where both partners have similar salaries.

For example, if each earns 3,000 euros gross per month, using IV/IV ensures relatively even tax withholdings.

If incomes differ significantly, an overpayment of tax may occur during the year, which can later be refunded through the tax return.

Tax Class IV/IV with a factor—for a more accurate calculation

IV/IV mit Faktor allows the income ratio between spouses to be taken into account during monthly tax withholding. The tax office calculates a special factor based on the projected annual earnings of both partners.

This option has several advantages:

- Tax withholdings more accurately reflect the expected annual tax liability

- The partner with the lower salary typically receives a higher net pay than under tax class V

- The risk of a significant additional tax payment after filing the tax return is reduced

- The tax burden is distributed more proportionally between the partners based on their incomes

Important: None of these combinations on its own reduces the couple’s final annual income tax when incomes and joint taxation conditions are the same. Only the monthly withholdings differ. The choice of tax class may also affect the amount of certain social benefits, which depend on net pay.

To estimate your tax liability for different tax classes, you can use the Federal Ministry of Finance calculator. It helps estimate Lohnsteuer but does not replace a full calculation of net pay that takes social security contributions into account.

Learn more about the best cities in Germany for expats to live in 2026 by following the link.

How to change your tax class in Germany in 2026?

You can change your Steuerklasse in Germany through the tax office (Finanzamt) or the ELSTER online portal. This is most often done after marriage, divorce, a change in a spouse’s income, or the birth of a child. In 2026, married couples can change their tax class combination several times throughout the year.

Step-by-Step Guide to Changing Your Steuerklasse

To apply for a new tax class, you must:

1. Check your current Steuerklasse. You can find it on your pay stub (Gehaltsabrechnung) or in the ELStAM electronic system.

2. Determine the available combinations. Married couples can choose III/V, IV/IV, or IV/IV with a multiplier. Single parents are eligible for tax class II if they meet the relevant conditions.

3. Log in to the Mein ELSTER portal. An account is required to submit an electronic application. Alternatively, you can contact your local Finanzamt.

4. Fill out the application. In 2026, use the form “Antrag auf Lohnsteuer-Ermäßigung und zu den Lohnsteuerabzugsmerkmalen” with the attachment “Anlage Steuerklassenwechsel.” To apply for Class II, you’ll need the attachment “Anlage Kinder.”

5. Submit the documents and check for updates. After processing the application, the Finanzamt updates your electronic tax records. The employer receives the updated information via ELStAM.

For married couples, the consent of both partners is usually required. An exception is the transition from the III/V combination to IV/IV, which can be initiated by either partner. Foreign nationals may also need documents confirming their marital status or other grounds for changing their tax class.

When does the new tax class take effect?

As a general rule, a change in tax class takes effect on the first day of the month following the submission of the application.

For example, if a married couple submits the documents on October 15, 2026, the new tax class will apply starting November 1.

To have a voluntary change taken into account in the current tax year, the application must be submitted no later than November 30, 2026. If submitted later, the new combination will generally apply starting in 2027.

Certain events, such as marriage or the death of a spouse, may trigger different rules for determining the effective date of the classification change.

Please note! After registering their marriage in Germany, married couples who meet the tax requirements are usually automatically assigned the IV/IV combination. If partners wish to switch to III/V or IV/IV with a multiplier, they must submit a separate application.

We previously discussed shortage occupations in Germany in 2026 for obtaining a Blue Card.

How to check your tax class in Germany and claim a refund?

Employees in Germany can check their Steuerklasse on their own, find out the amount of income tax withheld, and, under certain conditions, claim a refund of overpaid taxes. To do this, they use the ELStAM electronic system and the annual income tax return (Einkommensteuererklärung).

Where can you check your Steuerklasse?

Information about your tax class is available in three ways:

- On your pay stub (Gehaltsabrechnung). The tax class is listed in the “Steuerklasse” or “StKl” field. This document also shows your gross salary, withheld Lohnsteuer, and social security contributions.

- Through Mein ELSTER. After registering with your personal tax ID (Steuer-ID), you can view your ELStAM data online, including your current tax class.

- At your local Finanzamt. The tax office provides information about your registered tax data and helps correct errors.

If the documents list the wrong tax class (Steuerklasse), you must contact the Finanzamt. Your employer uses the official ELStAM data and cannot change your tax class on their own.

How do you get a tax refund in Germany?

A tax refund in Germany (Steuererstattung) is possible if, over the course of the year, the employer withheld more income tax than the employee’s final tax liability.

To receive a refund, you must file an income tax return (Einkommensteuererklärung) via ELSTER or another available method. When calculating the refund, the tax office (Finanzamt) takes into account annual income, withheld taxes, and allowable deductions.

Under certain conditions, expenses such as commuting costs, professional training, work equipment, relocation for professional reasons, and other deductions provided for by law can reduce taxable income.

After reviewing the return, the Finanzamt issues a tax assessment notice (Steuerbescheid). If an overpayment is determined, the funds are transferred to the specified bank account. However, filing a return does not guarantee a refund: based on the calculation results, an additional payment may also be due.

Who is required to file a tax return?

The obligation to file an Einkommensteuererklärung depends on sources of income and other circumstances. In particular, filing is usually mandatory for married couples using the III/V or IV/IV combination with a multiplier if both spouses receive a salary.

Employees in tax classes I or IV without a multiplier who receive only a standard salary can often file a return voluntarily to claim a potential overpayment. However, additional income or other circumstances provided for by law may create a reporting obligation regardless of the tax class.

Tip: After a change in tax class, it’s a good idea to check your first pay stub with the new information. This will help you identify incorrect withholdings in a timely manner and avoid unexpected additional payments at the end of the year.

In our previous article, we discussed how much the average worker in Germany will earn in 2026.

What Do Foreigners Need to Know About Tax Classes in Germany?

Tax classes in Germany for foreigners are determined by general rules; however, eligibility for certain benefits depends on tax residency, marital status, and the place of residence of family members. Citizenship alone does not determine the amount of income tax.

Before taking a job or changing your tax class (Steuerklasse), there are a few nuances to consider:

- Tax residency. Foreigners who have a place of residence or habitual abode in Germany are generally subject to unlimited taxation. This requires declaring income from Germany and other countries, taking into account international tax treaties. The 183-day rule is not the sole criterion for determining tax status.

- Marriage concluded abroad. If a foreign national was married outside of Germany, a foreign marriage certificate and proof of marital status may be required to change the tax class. The documents must be properly certified for use in Germany.

- Spouse residing abroad. Eligibility for tax classes III, IV, or V depends on the tax status of both partners. For EU and EEA citizens, there are specific options for joint taxation if the other partner resides in another EU or EEA country. The mere fact of marriage is not sufficient to automatically qualify for tax class III.

- Income from multiple countries. If a foreign national works simultaneously in Germany and abroad, the provisions of double taxation treaties must be taken into account. Foreign income may affect the calculation of German taxes even if it is not directly taxed in Germany.

- Registration after moving. After registering their place of residence (Anmeldung), a foreign national usually receives a personal tax identification number (Steuer-ID). The employer needs this to correctly calculate payroll tax (Lohnsteuer).

The specifics of taxation for foreign nationals are governed by § 1 EStG and § 1a EStG.

The main rule for employees in Germany: tax class should be assessed not only based on the amount of monthly net pay but also on the annual tax burden. For married couples, it’s worth comparing the available tax class combinations, checking eligibility for tax breaks, and considering possible refunds after filing a tax return. This will help you plan your family budget correctly and avoid unnecessary tax expenses.

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