How to calculate salary in Germany (with examples!)

Calculating your net salary from your gross salary is complicated in Germany. Salary Calculators can make this process easier and provide a decent estimate of your salary after taxes.

In this guide, I'll explain how the salary calculators work, and how to calculate your net salary on your own. Try out the Salary Calculator for Germany (English) or Brutto Netto Rechner before reading this guide.

All the thresholds, percentages, and amounts are based from 2022 for Salary Calculation.

What these German words mean in Salary Calculation

You can find the explanations of factors that are considered in your tax calculation that are used in a Brutto Netto Rechner.

What is Gross Salary (Brutto)?

This is your salary before taxes are applied or calculated. When companies offer an employment contract, the salary mentioned on there is Gross Salary.

What is Net Salary (Netto)?

Net salary is what you keep after taxes, social contributions, etc. For employees, the deductions and taxes are calculated by the employer during the payroll cycle. Net Salary is your take home pay.

What is Pension Insurance (Rentenversicherung)?

In Germany, as an employee, you are automatically signed up for Pension Insurance. This covers you from the first day of employment. You receive a pension, if you're working in reduced capacity, or if you're old, and has other benefits.

For 2022, it is 18.6% of your income. Your employer and you will split it equally (9.3%). If your income exceeds 84,600 € per year, your contributions will be based on 84,600 € and not your income. Also known as RV Beitrag.

What is Care Insurance (Pflegeversicherung)?

This is part of the social security system and covers you in case of requiring long-term nursing care. This contribution is part of your health insurance, either public or private.

For 2022, it falls around 3 to 3.5% of your income based on your state. Your employer and you will split it equally (1.775%).

If your income exceeds 58,050 € per year, your contributions will be based on 58,050 € and not your income.

What is Unemployment Insurance (Arbeitslosenversicherung)?

In case you lose your job, Unemployment Insurance gives you the right to claim benefits for unemployment (Arbeitslosengeld). This is also deducted from salaries, when you are paid.

For 2022, it falls around 2.4% of your income. Your employer and you will split it equally (1.2%). If your income exceeds 84,600 € per year, your contributions will be based on 84,600 € and not your income. Also known as AV Beitrag.

What is Health Insurance (Krankenversicherung)?

Everyone in Germany must have Health Insurance, either public or private health insurance. This is probably the biggest factor of your taxes / social contributions.

For 2022, it falls around 15.7% of your income based on your health insurance provider (public).  Your employer and you will split it equally (7.85%).
If your income exceeds 58,050 € per year, your contributions will be based on 58,050 € and not your income.

What is Solidarity Surcharge (Solidaritätszuschlag)?

This is an additional fee on your income tax, when you earn above a certain threshold. It goes towards the German reunification costs (and some more).

Solidarity Surcharge is only applicable if your income tax (and not income!) exceeds 16,956 € (for individual filers) and 33,912 € (for joint filers). According to Federal Ministry of Finance:

a family with two children and a gross annual income of up to 151,990 € will pay no solidarity surcharge, and nor will single persons with a gross annual wage of up to 73,874 €.

If your income is above 96,820 € (for single persons) or 193,640 € (for married people), you will pay 5.5% as contribution. If it is below that amount but above the limits, you will pay around 11.9% as contribution.

Which simply means that if your gross salary is above 73,874 € (for singles) or 151,990 € (for married), you will be paying solidarity surcharge.

Between 73,874 € and 96,820 € for singles, there is an exemption of 16,956 € on your Income Tax. After that, you will pay 11.9% on the remaining amount.

For married people, the gross salary can be between 151,990 € and 193,640 €, and the exemption is 33,912 €. You will still pay 11.9%.

If your income exceeds those ranges, you will pay a flat 5.5% on your Income Tax.

What is Church Tax (Kirchensteuer)?

When you do your apartment registration (Anmeldung), you declare your religion / whether you're a member of the church. If you are, then you pay your contributions towards the Church. Read more about Church Tax in Germany.

Church Tax ranges from 8 to 9% of your income tax, based on your state.

What is Salary Tax (Lohnsteuer)?

Salary Tax / Wage Tax / Payroll Tax is your salary after tax and is also taken care of by your Employer. You do not have to do anything.

What is Income Tax (Einkommensteuer)?

Income Tax is applied on any other income you have (self-employment, business, freelancing, etc)

Read about the difference between Lohnsteuer and Einkommensteuer

What is Tax Class (Steuerklasse)?

Tax Classes determine which rate your income is taxed at. From Wikipedia, this is how your Tax Class is determined in Germany.

• class 1 = single, living in a registered civil partnership, divorced, widowed or married, unless they fall under tax category 2, 3 or 4.

• class 2 = single but is entitled to single parent allowance.

• class 3 = married and spouse does not earn wages, or the spouse earns a wage but is classified under tax category 5 by request of both spouses, or to widowed workers for the calendar year following that of the spouse' death if both were residing in Germany and were not separated on the day of the spouse's death.

• class 4 = married, both spouses earn a wage, reside in Germany, and are not separated.

• class 5 = married but one of the spouses, at both spouses' request, is classified under tax category 3.

• class 6 = workers receiving multiple wages from more than one employer, in order for wage tax to be withheld for the second and any additional employment contracts.The taxation at source for capital income will be done with a flat tax rate of 25% (add solidarity surcharge of 5.5% of the amount of tax and, if applicable, church tax).

What is Progressive Tax Rates (progressiver Steuersatz)?

Your tax rate increases as your taxable amount increases. Based on your taxable income, you will pay a different % of tax.

What are the tax allowances in 2022?

Before taxes are calculated on your income, there are allowances (deductions) that you can make use of, on your salary. For example, the basic allowance (Grundfreibetrag) for 2022 is 9,984€ - for single persons - meaning that it is subtracted from your gross salary before calculating taxes.

Income Tax formula

It's a rather complicated system, and a lot of sources in Germany do not explain it clearly. For example, take a look at how the Salary / Income Tax (Lohnsteuer) is calculated from one of the sources in German.

The standard income tax shall be calculated on the basis of taxable income. From the 2022 assessment period and subject to sections 32b, 32d, 34, 34a, 34b and 34c, it shall amount in each case to the following in euros for taxable income

1. up to EUR 9,984 (basic tax-free amount):
0;

2. from 9 985 euros to 14 926 euros:
(1,008.70 - y + 1,400) * y;

3. from 14 927 euros to 58 596 euros:
(206.43 * z + 2,397) * z + 938,24;

4. From 58 597 euros to 277 825 euros:
0.42 * x - 9,267.53;

5. From 277 826 euros to:
0.45 * x - 17,602.28;

The quantity "y" is one ten-thousandth of the part of the taxable income rounded down to a full euro amount that exceeds the basic tax-free amount. 

The quantity "z" is one ten-thousandth of the part of the taxable income exceeding 14,926 euros rounded down to a full euro amount. 

The quantity "x" is the taxable income rounded down to a full euro amount. The resulting tax amount shall be rounded down to the nearest full euro amount.

Income Tax formula in Germany

We will try to work our way through Income Tax formula through examples instead.

Examples to explain how taxes are calculated in Germany

From my experience, it's easier to explain how taxes are calculated in Germany with examples.

How much taxes to pay for 50,000 € salary in Germany for Tax Class 1?

Assuming you're single and without children, you would fall under Tax Class 1. Also, not part of the Church. You can see a full taxes breakdown for 50,000 € in Germany.

Okay, so how is this calculated? All of these are just the employee's contribution only and falls under the thresholds mentioned above.

• Gross Salary is 50,000€ per year

• Pension Insurance is 9.3 % of your Gross Salary.
  
  50,000 * 0.093 = 4,650 €

• Unemployment Insurance is 1,2% of your Gross Salary.
  
  50,000 * 0.012 = 600 €

• Health Insurance is approximately around 7.85 % of your Gross Salary.
  
  50,000 * 0.0785 = 3,925 €

• Care Insurance is 1.775 % of your Gross Salary.
  
  50,000 * 0.01775 = 887.50 €

• Taxable Income is your Gross Salary minus Allowances.
  
  50,000 - 9,924 = 40,076 €

• Income Tax is calculated with your Gross Salary minus all social contributions.
  
  50,000 - (4,650 + 600 + 3,925 + 887.50) = 39,937.5 €
  
  The remaining amount 39,937.5 € falls under Income Tax formula #3, so we will substitute this: (206.43 z + 2,397) z + 938.24;

z = (39937.5 - 14,928) / 10,000 => 2.5009
  
  Then we substitute it in the formula
  Income Tax: ((206.43 2.5009 + 2,397) 2.5009 + 938.24) = 8,224 €

• Church Tax is zero

• Solidary Surcharge is zero as your Gross Salary did not exceed the threshold

• Net Salary is calculated as Gross Salary minus social contributions minus income tax minus church tax
  
  50,000 - (4,650 + 600 + 3,925 + 887.50) - 8,224 - 0 = 31,713.5 €

How much taxes to pay for 50,000 € salary in Germany for Tax Class 3?

Using the same gross salary, under Tax Class 3 (married, higher income earner than partner) and not part of the church.

All of these are just the employee's contribution only and falls under the thresholds mentioned above.

• Gross Salary is 50,000€ per year

• Pension Insurance is 9.3 % of your Gross Salary.
  
  50,000 * 0.093 = 4,650 €

• Unemployment Insurance is 1.2% of your Gross Salary.
  
  50,000 * 0.012 = 600 €

• Health Insurance is approximately around 7.85 % of your Gross Salary.
  
  50,000 * 0.0785 = 3,925 €

• Care Insurance is 1.775 % of your Gross Salary.
  
  50,000 * 0.01775 = 887.50 €

• Taxable Income is your Gross Salary minus Allowances. This changes for Tax Class 3 for Basic Allowance. It is twice as much as for single people.
  
  50,000 - 19,968 = 30,032 €

• Income Tax is calculated with your Gross Salary minus all social contributions.
  50,000 - (4,650 + 600 + 3,925 + 887.50) = 39,937.5 €
  
  This amount is cut into half for married people under Tax Class 3. So it is 19,968.75 €.
  
  The remaining amount 19,968.75 € falls under Income Tax formula #3, so we will substitute this: (206.43 z + 2,397) z + 938.24;

z = (19,968.75 - 14,928) / 10,000 => 0.504
  
  Then we substitute it in the formula
  Income Tax: ((206.43 0.504 + 2397) 0.504 + 938.24) = 2,198.76 €
  
  This amount is finally multipled by 2 for Tax Class 3. So your Income Tax is around 4,396 €

• Church Tax is zero

• Solidary Surcharge is zero as your Gross Salary did not exceed the threshold

• Net Salary is calculated as Gross Salary minus social contributions minus income tax minus church tax
  
  50,000 - (4,650 + 600 + 3,925 + 887.50) - 4,396 - 0 = 31,713.5 €

How much taxes to pay for 90,000 € salary in Germany for Tax Class 2, being part of the Church?

Using 90,000 € gross salary, under Tax Class 1 (single parent) and part of the church. This will involve the Solidarity Surcharge and Church Tax.

All of these are just the employee's contribution only.

• Gross Salary is 90,000€ per year

• Pension Insurance is 9.3 % of your Gross Salary.
  
  Pension Insurance is calculated for a maximum Gross Salary of 84,600€ which exceeds 7,867 € so it is capped at that maximum amount.
  
  84,600 * 0.093 = 7,867 €

• Unemployment Insurance is 1,2% of your Gross Salary.
  
  84,600 * 0.012 = 1,015 €

• Health Insurance is approximately around 7,85 % of your Gross Salary. Health Insurance is capped at 58,050 € Gross Salary.
  
  58,050 * 0.0785 = 4,556 €

• Care Insurance is 1,775 % of your Gross Salary. Care Insurance is capped at 58,050 € Gross Salary.
  
  58,050 * 0.01775 = 1,030 €

• Taxable Income is your Gross Salary minus Allowances.
  
  90,000 - 9,984 = 80,016 €

• Income Tax is calculated with your Gross Salary minus all social contributions.
  
  90,000 - (7,867.80 + 1,015.20 + 4,556.92 + 1,030.39) = 75,529.69 €
  
  There is a Single Parent Relief Amount of 4,008 € that is available.

  75,529.69 - 4,008 = 71,521.69 €
  
  The remaining amount 71,521.69 € falls under Income Tax formula #4, so we will substitute this in the formula: 0.42 * x - 9,267,53;

  x = 71,521.69
  
  Then we substitute it in the formula
  Income Tax: 0.42 * 71,521.69 - 9,267.53 = 20,771 €

• Church Tax is usually around 8% or 9% on your Income Tax depending on your state. For Berlin, it's 8%, based on that:
  
  20,771 * 0.08 = 1,661 €

• Solidary Surcharge is 11,9% of your Income Tax until 96,820 € (there is an allowance of 16,956 € as well). After that, it becomes 5.9%.
  
  (20,771 - 16,956) * 0.119 = 454 €

• Net Salary is calculated as Gross Salary minus social contributions minus income tax minus church tax
  90,000 - (7,867.80 + 1,015.20 + 4,556.92 + 1,030.39) - 20,771 - 1,661 - 454 = 52,643.69 €

How can I know if I paid too much taxes? Can I get a tax refund?

Yes, that is possible. When you file a tax return, you can claim a tax refund when possible. Estimate how much you can claim back using the tax return calculator.

If you have reached here, congratulations and I hope this guide helped you understand the complicated Brutto Netto Rechner (Salary Calculator) a little better. For a quick reference, I recommend (shamelessly) using our salary calculator for Germany.

Here is a salary report for Berlin by Handpicked Berlin that contains 1,061 responses from people living in Berlin!