Salary Germany

Q: What are the differences between public and private health insurance?

A gist on what public and private health insurances are: Public / Statutory insurance is regulated by the German Government. Almost 90% of the population (73,3 million) contributes to the public health insurance. Public health insurance also includes cover for your long-term care insurance (Pflegeversicherung). The costs of public health insurance change with your salary, but are capped at a maximum. The costs (see below) are split between you and your employer equally. Private Health Insurance , on the other hand, requires you to qualify under certain conditions. Example: As a salaried employee, you must make more than 64.350 € annually. Applicants can also be rejected because of previous illnesses or because of their age. In contrast to public health insurance, the premiums in private health insurance, and the contributions depend on your age (at registration), individual risk of illnesses and disability and deductibles.

Question 1

What is the difference between Gross Salary and Net Salary in Germany?

Accepted Answer

Gross salary (also known as Brutto) is your income (monthly or annual income) before deductions. This is the amount usually specified on your employment contract.
Net salary (also known as Netto) is what you get to keep after taxes. For employees, the deductions and taxes are calculated by the employer during the payroll cycle. Net Salary is essentially your take home pay.

Question 2

How is Net Salary calculated?

Accepted Answer

Net Salary is calculated based on your Tax Class (Steuerklasse), which determines your social contributions for

Pension Insurance
Unemployment Insurance
Health Insurance
Care Insurance
Solidarity Surcharge

Question 3

How much is the total tax in Germany?

Accepted Answer

How much taxes you pay depends on how much you earn and your tax class.

When your total salary per year is upto 10.908 €, the tax rate is 0%.
Between 10.909 € to 61.972 €, the tax rate increases progressively between 14% to 42%.
Between 61.973 € to 277.825 €, the tax rate is 42%.
More than 277.825€, the tax rate is 45%.

Question 4

What are the changes for tax calculation in 2023?

Accepted Answer

Some of the changes are:

Basic allowance has increased from 9.984€ to 10.908€
Unemployment Insurance contribution has increased from 2,4% to 2,6%
Health insurance and care insurance limit has increased from 58.050€ to 59.580€
Solidarity Surcharge exemption has increased from 16.956€ to 17.543€
Other contribution assessment ceiling has increased from 84.600€ to 87.600€
Child allowance has increased from 4.194€ & 8.388€ to 4.476€ & 8.952€
Progressive tax rates have been adjusted. Take a look at the table above.

Question 5

What is a Tax Class (Steuerklasse) and how can I find my tax class in Germany?

Accepted Answer

Wikipedia has a neat definition so here it goes - Taxation classes (tax groups, Lohnsteuerklasse aka Steuerklassen)

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.

In simpler words, Tax Classes are defined in essence to be:

1: Not married, no children
2: Single parent
3: Married (higher income than partner)
4: Married (equal income earner)
5: Married (lower income than partner)
6: Secondary and additional income

Question 6

Is my income tax based on gross salary or net salary?

Accepted Answer

Your Income Tax is calculated after deductions from allowances and social contributions.

Question 7

What are the differences between public and private health insurance?

Accepted Answer

A gist on what public and private health insurances are:
Public / Statutory insurance is regulated by the German Government. Almost 90% of the population (73,3 million) contributes to the public health insurance. Public health insurance also includes cover for your long-term care insurance (Pflegeversicherung).
The costs of public health insurance change with your salary, but are capped at a maximum. The costs (see below) are split between you and your employer equally.

Private Health Insurance, on the other hand, requires you to qualify under certain conditions. Example: As a salaried employee, you must make more than 64.350 € annually.
Applicants can also be rejected because of previous illnesses or because of their age. In contrast to public health insurance, the premiums in private health insurance, and the contributions depend on your age (at registration), individual risk of illnesses and disability and deductibles.

Question 8

What are the different options for Health Insurance?

Accepted Answer

There are three options that you can choose on here for Health Insurance, that affects your contribution.

Public / Statutory
Private (without employer contribution) - You have a private health insurance, and you cover the costs completely, without any contributions from your employer.
Private (with employer contribution) - You have a private health insurance, and your costs are shared with your employer.

Question 9

How much contribution goes towards Pension Insurance (Rentenversicherung)?

Accepted Answer

For 2023, it is 18.6% of your income. Your employer and you will split it equally (9,3%).
If your income exceeds 87.600 € per year, your contributions will be based on 87.600 € and not your income.

Question 10

How much contribution goes towards Care Insurance (Pflegeversicherung)?

Accepted Answer

For 2023, 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 59.850 € per year, your contributions will be based on 59.850 € and not your income.

If you are insured with private health insurance, you are not automatically enrolled in a long-term care insurance program. The contribution is therefore 0€ here.

Question 11

How much contribution goes towards Unemployment Insurance (Arbeitslosenversicherung)?

Accepted Answer

For 2023, it falls around 2,6% of your income. Your employer and you will split it equally (1,3%).
If your income exceeds 87.600 € per year, your contributions will be based on 87.600 € and not your income.

Question 12

How much contribution goes towards Public Health Insurance (Krankenversicherung)?

Accepted Answer

For 2023, 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 59.850 € per year, your contributions will be based on 59.850 € and not your income.

Question 13

How much is the employer's contribution for Private Health Insurance?

Accepted Answer

Your employer can contribute for upto half of your monthly contribution, or a maximum of 385 €, whichever is lower.

Question 14

What is the Total Contribution for Private Health Insurance?

Accepted Answer

The total amount you pay for your private health insurance (including your employer's contribution).
            If you enter your salary in monthly or yearly values, please enter this total contribution in the same frequency.

Question 15

How much contribution goes towards Solidarity Surcharge (Solidaritätszuschlag)?

Accepted Answer

Solidarity Surcharge is only applicable if your income tax (and not income!) exceeds 17.543 € (for individual filers) and 35.086 € (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.

Question 16

How much contribution goes towards Church Tax (Kirchensteuer)?

Accepted Answer

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

Question 17

Is there a difference between Wage / Payroll Tax (Lohnsteuer) and Income Tax (Einkommensteuer)?

Accepted Answer

Wage / Payroll Tax is your salary after tax and is also taken care of by your Employer.
Income Tax (Einkommensteuer) is applied on any other income you have (self-employment, etc)

Question 18

Where can I see the salary breakdown?

Accepted Answer

Your Employer will provide you a Payslip (Gehaltsabrechnung) which should display a breakdown of your salary, taxes and social contributions.

Question 19

What is a Gehaltsrechner or Brutto Netto Rechner?

Accepted Answer

A Gehaltsrechner is the German word for a Salary Calculator. If you do speak German, the Federal Ministry of Finance has an official "Berechnung der Lohnsteuer" (A calculator for Wage Tax) that provides a lot of options.
Brutto Netto Rechner simply translates to Gross Salary Calculator.

Question 20

Can you explain how the calculator works?

Accepted Answer

Yes, you can find a guide on this: Salary Calculation in Germany explained

Question 21

Can I claim some of the tax back in a tax return?

Accepted Answer

That is possible, check our tax refund calculator.

Question 22

Is this tool accurate?

Accepted Answer

As much as we aim to be accurate, some of the factors used to calculate cannot be a 100% match
    to you as this varies from person to person(example: Health Insurance provider). Please contact a Tax Consultant for accurate information .

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