Taxes on Salary (Lohnsteuer)

Income tax on salary in Germany (Lohnsteuer)

Lohnsteuer is the tax that is deducted directly from an employee’s monthly salary and transferred to the tax office (Finanzamt).
It is not a separate tax, but rather an advance payment towards the annual income tax (Einkommensteuer).

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What is deducted from your salary each month in Germany?

When you receive your salary, the following items are automatically deducted:

1. Lohnsteuer (wage tax) | Depends on salary and tax class

2. Solidaritätszuschlag (solidarity surcharge) | 5.5% of the Lohnsteuer (only for higher incomes)

3. Kirchensteuer (church tax – optional) | 8% or 9% of the Lohnsteuer (if you are a member of a registered church)

4. Pension insurance (Rentenversicherung) | Around 18.6% (half paid by the employee)

5. Health insurance (Krankenversicherung) | Around 14.6% + 1–2% extra contribution (half paid by the employee)

6. Unemployment insurance (Arbeitslosenversicherung) | Around 2.6% (half paid by the employee)

7. Long-term care insurance (Pflegeversicherung) | Around 3.4% (half paid by the employee)

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Factors that influence the amount of Lohnsteuer:

• your gross monthly salary (Bruttolohn)

• your tax class (Steuerklasse)

  • Example: Steuerklasse 1 (single) usually pays more than Steuerklasse 3 (married, with a non-working spouse).

• the number of children / child allowances (Kinderfreibetrag)

• whether you are a member of a church (for Kirchensteuer)

• the federal state (Bundesland) – the rate of Kirchensteuer differs between federal states

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Practical example:

A single person (Steuerklasse 1), living in Berlin, with a gross monthly income (Brutto) of €3,000:

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Tips to reduce Lohnsteuer:

• Choose the most suitable tax class, especially for married couples

• Claim deductions and allowances when filing your annual tax return (Steuererklärung)

• Register your children to benefit from the Kinderfreibetrag or child benefits

• Make use of flat-rate allowances, such as the Pendlerpauschale (commuter allowance)

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Important terms:

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The editorial team of the website strives to provide accurate information based on thorough research and multiple reliable sources. However, errors may still occur, or some details may be incomplete or not fully confirmed. Therefore, please treat the information in this article as an initial reference only and always contact the competent authorities for final and legally binding information.