Taxes withheld from your pay
Wage tax (Lohnsteuer) is an advance payment on your income tax, calculated from your gross pay and your tax class. It rises progressively: the first slice of income is tax free, and each further slice is taxed at a higher rate.
On top of it come the solidarity surcharge, which most employees no longer pay after the 2021 reform, and church tax, which only applies if you are a registered member of a collecting religious community.
Social security contributions
Social security is split roughly in half between you and your employer, and each branch has an income ceiling above which no further contributions are charged.
- Health insurance — the largest single item, including a fund-specific supplementary rate.
- Long-term care insurance, with a surcharge for employees without children.
- Pension insurance.
- Unemployment insurance.
What you can actually influence
Your tax class changes the monthly withholding, though not the annual total. A registered allowance (Lohnsteuerfreibetrag) for expenses you know you will have, such as a long commute, increases your net pay every month rather than once a year.
Salary components taxed at a lower rate or not at all — company pension contributions, job tickets, bike leasing, the tax-free benefit-in-kind allowance, and childcare subsidies — are usually worth more than an equivalent gross increase.
Why your colleague nets more on the same gross
Same gross salary, different net pay is normal. Marital status and tax class, children, church membership, the supplementary rate of the specific health insurer, private versus statutory health insurance, and the federal state all shift the result.
If your net pay changes suddenly without a raise, the usual causes are crossing a contribution ceiling, a tax class change taking effect, or a one-off payment being taxed at the higher marginal rate.
Frequently asked
Roughly how much of my gross salary will I keep?
For a single employee without children, plan on somewhere around 55 to 65 percent net, depending on income level, health insurer and church membership.
Are bonuses taxed more heavily?
A bonus is taxed at your marginal rate, which makes the withholding on that payslip look brutal. Any excess is corrected in the annual return.
Does a raise ever leave me with less?
No. The progressive system only taxes the additional slice at the higher rate, so more gross always means more net.
This guide is general information on German tax law, not advice on your individual case. Rules and figures change with each tax year.