Tax classes and saving on tax
Income tax is not determined solely by the amount of income.
When calculating taxable income, the family situation is also taken into account.
Every taxpayer is assigned to a particular Lohnsteuerklasse (wage tax class) to enable monthly consideration and not only retrospectively at the end of the year.
In Germany, income tax is the most important tax for employees. It is levied on the income earned, i.e. wages.
Each month income tax is transferred as “Lohnsteuer” (wage tax) by the employer to the Finanzamt (tax office), so you do not have to worry about anything.
It is advisable, however, to keep documents relating to taxes carefully.
The tax rate depends on your income – the higher your income, the higher the tax rate.
Your tax class also influences the amount of tax and depends on your marital status, for example whether you are married or have children.
If you are a member of a church, Kirchensteuer (church tax) is also transferred by the employer to the tax office.
The tax classes
Tax class 1:
This tax class is for employees who are single and without children, or for employees who are married but whose spouse has no income or is assigned to tax class 5 or 6.
Tax class 2:
This tax class is intended for single parents with minor children. Tax class 2 takes into account the higher need for tax relief because of the care and upbringing of children.
Tax class 3:
This tax class is intended for married couples where only one spouse works. In this tax class the higher income of the spouse is taxed more heavily and the income of the other spouse is relieved.
Tax class 4:
This tax class is intended for married couples where both spouses work. The tax class combination 4/4 is the most frequently chosen, because the income of both spouses is taxed roughly evenly.
Tax class 5:
This tax class is intended for married couples where one spouse has a higher income than the other. The spouse with the higher income is assigned to tax class 3, the other to tax class 5.
Tax class 6:
This tax class is intended for employees who hold several jobs at the same time. In this tax class the additional income is taxed.