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The different Tax Categories of the German Wage Tax system

The German Wage Tax System is differentiating between 6 Tax Categories, depending to the linving-circumstances of the employees.

Tax Category I: Single, separated or married not living together who don’t fall into the category II or III.

Tax Category II: Single or separated people living with their child, who are entitled to a child's allowance.

Tax Category III : For people who are married, husband and wife are living together. Very interesting for people who are married and one of them has a high income while the other one has no income or a low income. Ideally the person with the low income will have Tax Category V and the other Tax Category III.

Tax Category IV : For people who are married, husband and wife are living together. Ideally for married employees while both of them receive similar wages. Both will then have Tax Category IV.

Tax Category V : For people who are married, husband and wife are living together. One of them has a Tax Card of Category III (form more information refer to Tax Category III).

Tax Category VI : For employees who have more than one employer, receiving wages from different employments will need a second or third, or… tax card of Tax Category VI. Ideally the employment with the lower income will get Tax Category VI.

Who will have to pay Church Tax

Employees who are a member of a church will have to pay church tax. The church tax rate is depending to the state. In most cases the rate is 9 % from the Wage Tax.

Social insurance contributions in Germany 2024

The Social Insurance Contributions are generally paid half by the employee and half by the employer. These contributions are obligatory, limited to a maximum fee, containing the following contributions:

Pension Insurance: 18,6 % of the Gross Wage, will be paid by the employee and by the employer together, half by half.

Unemployment Insurance: 2,6 % of the Gross Wage, will be paid by the employee and by the employer together, half by half.

Health Insurance: 14,6 % of the Gross Wage as well as a additional contribution of approx. 1,70 % dependent to your insurance company, The half will be paid by the employer and the other half by the employee for both parts of the Health Insurance. If the salary of an employee is higher as a specific limit of 66.600 €, the employee will be able to change into a private health insurance.

Care Insurance: 3,40 % of the Gross Wage, will be paid by the employee and by the employer together, half by half. The amount of Care Insurance will be reduced for employees having a child.

Tax-Free Allowance 2024

An employee with an yearly income of 11.604 € won’t have to pay income tax, for married employees the limitation will be 23.208 €.