How much is your net salary in Germany?

Every person who is working is required to pay salary taxes in Germany. There is a big difference between the gross salary which you see in job ads and the net salary which you are receiving on your bank account after all deductions. Germany has a progressive salary and income tax system, which means that your tax rate increases as your salary rises. People who earn less money can end up having more money in their pockets because of this tax system. In comparison to many other countries, Germany has a more equitable income distribution.

Gross YearlyGross MonthlyNet YearlyNet Monthly
20.000 €1.667 €14.844 €1.237 € 
30.000 €2.500 €20.667 1.722 €
40.000 €3.333 €26.210 2.184 €
45.000 €3.750 €28.874 2.406 €
50.000 €4.167 €31.467 2.622 €
55.000 €4.583 €33.988 2.832 €
60.000 €5.000 €36.555 3.046 €
65.000 €5.417 €39.225 €3.268 €
70.000 €5.833 €41.805 3.483 €
75.000 €6.250 €44.316 3.693 €
80.000 €6.667 €46.625 3.885 €
100.000 €8.333 €57.373 4.781 €
120.000 €10.000 €68.245 5.687 €
150.000 €12.500 €84.952 7.079 €
Overview Gross vs. Net Salary in Germany 2021

Note: Net salary calculations above are based on a single person living in Berlin. Your net salary can vary if you have family and live in another city. The following calculator can assist you in calculating your individual net salary based on your own characteristics.

What do gross salary and net salary mean in Germany?

Gross salary = Salary before any deductions (stated in job ads and offers)

Net salary = Salary transferred to the employee’s bank account after all deductions (taxes plus statutory deductions for different insurances and contributions)

What are deductions from the gross salary in Germany?

The following deductions are deducted from your gross salary when calculating your net salary:

Taxes:

  • Income tax
  • Church tax (if a member)
  • Solidarity surcharge tax

Insurances:

  • Health insurance
  • Pension insurance
  • Care insurance (should cover the risk of the need for care)
  • Unemployment insurance

Source: Steurklassen 

What is income tax in Germany and who is obliged to pay it?

The income tax is a community tax that is charged to every natural person in Germany.

In principle, everyone residing or living in Germany for more than six months is obliged to pay income tax.

Are taxes in Germany high? What is the tax rate in Germany 2022?

Yes, taxes in Germany are high. The income tax rate is progressive, meaning it is getting higher as your salary is increasing. The highest income tax rate is 45% and this is known taxes for rich people since this is the tax rate for people who are earning more than 274,613 € annually.

German income tax rangesGerman income tax rate
Up to 9.984 €0%
9.984 € – 57.918 €14 – 42%
57.919 € – 274.613 €42%
274.613 € and above45%

Which types of income are taxable in Germany?

It is a general principle in Germany that all income and earnings are taxable. Seven types of income are distinguished by the legislature. Your annual income tax return must disclose all of your earnings. 

Taxable income and earnings include:

  • Employment
  • Self-employment e.g. Freelancer or entrepreneur in a partnership
  • Income from agriculture and forestry
  • Income from a commercial enterprise
  • Rental and leasing income
  • Income from capital
  • Other Income

Source: Fastbill 

The legislation also distinguishes between unlimited and limited taxation.

You are liable for unlimited taxes if you are domiciled in Germany or live there most of the time, regardless of your citizenship. A limited tax liability applies, however, if you don’t live in Germany but earn income here. 

The principles of income tax in Germany

The net principle

Taxation is limited to net income; that is, income minus business expenses and income-related expenses.

Performance-based taxation

Taxation is based on the individual’s earning and economic performance. This means that different incomes are also taxed differently. People with higher income pay higher income taxes.

Principle of World Income

You must pay income tax in the country where you live if you follow the world income principle. Any income earned abroad is also taxable in your country of residence.

The periodicity principle

Taxes are calculated based on fixed periods, regardless of previous or subsequent periods.

The principle of staggered tax rates

Taxes on your income are staggered – progressive. Your tax rate increases as your income increases.

Who is exempt from income tax liability in Germany?

Germany does not exempt anyone from paying taxes if their income exceeds the tax-free personal allowance which is 9.984 € in 2022.

However, some people are entitled to additional allowances and tax rebates.

Disabled people may qualify for things like car tax reductions, state care allowances, and special protection against dismissal. All of this helps reduce their tax bill.

In Germany, retirees must also pay tax if their pension income exceeds their allowance.

The income tax liability of employees who earn less than 450 euros per month and work so-called “mini-jobs” is exempt.


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