Referred to as “steuerklassen”, tax classes set the income tax rate based on your marital status, how much money your spouse earns and how many dependent children you have. The amount of unemployment benefits, social security and leave depend all on the tax class you have been assigned to.
Every employee must personally declare and register his/her current circumstances with the German authorities.
Once the tax authorities associate your profile to a tax class, it will be used to calculate and withhold tax from the monthly payroll.
In case there will be any change in your life, the tax class can be modified in your payroll. All incorrect withholding accounted for will be added in your tax return at the end of the fiscal year.
The first class is for single workers, or for those whose spouses live abroad
Singles and separated, with a dependent child
“Married”, or “widowed employees who are within the first year of a spouse's death”
Married, both spouses receive an income
Married persons whose spouse has a higher income.
Workers who have more than one job and own different tax cards (Lohnsteuerkarte).
NOTE: For tax class III (Three), both husband and wife should be registered and living in Germany. If the spouse is not living in Germany then Tax Class I (One) will be applied.
The majority of non-residents fall into either Tax class I or III (One or three). If both partners are working then tax class IV will apply.
Formally, you have the right to change your tax class once per year. However, life events may cause a change in class either.
As mentioned above, you can change your Steuererklärung:
To check your and your partner current situation, you can use this German simulator. Here you have to enter both your gross salaries in it, together with your postal code. You will be able to see if it’s worth to make a tax class change in Germany.
Still not sure about your tax class and your tax return? Write to us and try to recalculate how much tax you paid last year: if the amount of your tax was higher, German tax authorities could owe you a refund!