How German income tax is structured
Germany taxes income above a basic allowance, the Grundfreibetrag. Above it, the rate rises smoothly from 14% to 42%, and a top rate of 45% applies to very high incomes. Unlike most countries, the rate climbs continuously within a zone rather than in fixed steps.
The exact formula is set in section 32a of the Income Tax Act (EStG), and the allowance is updated most years.
What this estimate includes
To keep things simple, this calculator turns the continuous formula into four stepped bands. That gives a useful planning figure, but it will not match your tax assessment to the euro.
- It does not include the solidarity surcharge (Solidaritätszuschlag) or church tax (Kirchensteuer).
- It does not apply joint assessment for married couples (Ehegattensplitting).
- Social security contributions are not included.
How to use the calculator
Enter your gross annual income and add deductions such as work-related expenses (Werbungskosten) or special expenses (Sonderausgaben) on separate lines. The basic allowance is applied for you.
The results show taxable income, estimated tax, effective and marginal rates and income after tax. Export the summary to Excel to discuss it with your adviser. If you are self-employed, start from your profit: our income statement generator can help.