Individual income taxes in Germany
Before you start working in Germany you should get at least some brief knowledge about the individual income tax, the tax classes and other taxes.
Anyone who resides in Germany and is employed there is subject to individual income tax (Einkommensteuer), although there is a minimum untaxed allowance of up to 9,169€.
What is income tax?
Income tax is money paid to the government from your gross earnings. Your employer will automatically deduct any tax due from your gross paycheck and pay it to the German tax office. Your employer will also deduct any social security contributions.
When did income tax start?
To go way back, income tax in some form first began in Ancient Egypt. Income tax in Europe was rolled out from around the 18th century, usually when a country needed to fund a war. The German word for tax is Steuer, which translates, in one sense, as ‘duty’ – which is logical seeing as individuals are obliged to pay it towards national public funding.
What is the tax rate in Germany 2019?
The minimum taxable income is 9,169€ (no tax is charged under this amount). The tax rate starts at 14%, rising in a series of income tax brackets to 45% for the highest earners (over 265,327€).
Progressive tax: a definition
Germany has a progressive taxation system. A country with a progressive tax system such as Germany charges more tax to higher earners on a sliding scale.
How much will I make after taxes?
You need to calculate your monthly (or weekly) wage and then calculate how much will be deducted for income tax and social security contributions based on the bracket you will fall into.
Use an online German income tax calculator to find out how much you should take home after tax and social security contributions.