You got a job offer. The salary looks great. Then your first payslip arrives and you wonder if there’s been a mistake.
Welcome to the brutto vs. netto moment. Almost every international in Germany has it. The number in your contract (brutto) and the number in your bank account (netto) can differ by 30–40%. Nothing went wrong. That gap is made up of income tax and social security contributions and once you understand what they are and why they exist, you can actually plan around them.
This guide breaks it all down: what each deduction is, what the 6 tax classes mean for you, and what your salary actually looks like once everything has been taken out.
1. Brutto vs. Netto — The Core Difference
Your brutto salary is what your employment contract says the full amount your employer agrees to pay you. Your netto salary is what hits your bank account after deductions.
In Germany, those deductions fall into two categories:
• Lohnsteuer — income tax, withheld monthly by your employer
• Sozialversicherungsbeiträge — social security contributions to five compulsory insurance systems
For most employees in Tax Class 1, roughly 60–65% of gross salary remains as net. On a €5,000 brutto salary, you’re typically taking home somewhere around €3,100. Exact figures depend on your tax class, health insurer, and personal circumstances.
2. What’s Actually Being Deducted?
Here’s a clear breakdown of every deduction that comes out of your German payslip:
| Deduction | Employee Rate (2026) | What It Covers |
| Pension Insurance (Rentenversicherung) | 9.3% | State pension — your employer also pays 9.3% |
| Health Insurance (Krankenversicherung) | 7.3% + avg. ~1.25% supplement | Public healthcare (GKV) |
| Long-Term Care (Pflegeversicherung) | 1.7% (2.0% if childless) | Nursing and care costs in later life |
| Unemployment Insurance (Arbeitslosenversicherung) | 1.3% | ALG I payments if you lose your job |
| Income Tax (Lohnsteuer) | Progressive (0–45%) | Calculated based on your tax class and income level |
| Solidarity Surcharge (Soli) | 0% for most employees | Only for earners above ~€100,000 gross/year |
| Church Tax (Kirchensteuer) | 8–9% of income tax | Only deducted if registered with a recognised church |
Your employer matches your pension, health, long-term care, and unemployment contributions — so the actual cost to them is significantly higher than your contract salary.
→ Note for private health insurance (PKV) holders: If you opted for private insurance rather than the statutory system (GKV), your health and long-term care deductions are replaced by your monthly PKV premium, which varies by provider and plan.
3. German Tax Classes (Steuerklassen) 1–6 Explained
Your tax class (Steuerklasse) determines how much income tax your employer withholds each month. It does not permanently fix your tax rate — your actual annual liability is settled when you file your tax return. But it directly affects your monthly net pay.
| Tax Class | Who It’s For |
| Class 1 | Single, divorced, widowed, or permanently separated. The default for most new arrivals. |
| Class 2 | Single parents raising a child alone. Comes with an extra allowance of €4,260/year (2026). |
| Class 3 | Married and you earn significantly more than your spouse. You pay lower monthly tax; your spouse is in Class 5. |
| Class 4 | Married with similar incomes. Both partners default to Class 4 when they marry. |
| Class 5 | Married and you earn significantly less than your spouse (who is in Class 3). Higher withholding, lower monthly net. |
| Class 6 | Second or additional job. No allowances at all — the highest possible withholding rate. |
New to Germany? Until you complete your Anmeldung (registration) and pass your tax ID on to your employer, you will be assigned Tax Class 6 — the most expensive class, with no allowances whatsoever. Get this done as soon as you arrive. The sooner your employer has your Steueridentifikationsnummer, the sooner you move to the correct class.
Married couples — Class 3/5 vs. Class 4/4: If one of you earns significantly more, switching to Class 3/5 increases the higher earner’s monthly net pay. The trade-off is a larger settlement at year end for the lower earner — you’ll need to file a joint return to balance it out.
4. Income Tax Brackets for 2026
Germany uses a progressive income tax system, your rate increases as your income rises. The 2026 brackets look like this:
| Annual Gross Income | Tax Rate |
| Up to €12,348 | 0% — basic tax-free allowance (Grundfreibetrag) |
| €12,349 – approx. €68,000 | 14% → rising gradually to 42% |
| approx. €68,000 – €277,826 | 42% (flat) |
| Above €277,826 | 45% (Reichsteuer) |
The basic tax-free allowance (Grundfreibetrag) for 2026 is €12,348 — the first €12,348 you earn is completely untaxed. This increased from €12,096 in 2025.
Germany does not apply your top bracket to all your income — only to the portion that falls within each band. So if you earn €70,000, you do not pay 42% on everything. You pay progressive rates on the lower bands, and 42% only on the slice above the threshold.
5. Real Example: €5,000 Gross in Tax Class 1
Let’s put real numbers to this. Here’s an approximate monthly breakdown for a single person, Tax Class 1, public health insurance (GKV), no church tax, earning €5,000 brutto:
| Item | Amount |
| Gross Salary (Brutto) | €5,000.00 |
| Pension Insurance (9.3%) | − €465.00 |
| Health Insurance (~8.55%) | − €427.50 |
| Long-Term Care (1.7%) | − €85.00 |
| Unemployment Insurance (1.3%) | − €65.00 |
| Total Social Contributions | − €1,042.50 |
| Income Tax (Lohnsteuer) | − approx. €858.00 |
| Solidarity Surcharge | €0.00 |
| Net Salary (Netto) | approx. €3,099 |
These are estimates based on 2026 rates. The health insurance figure uses the average supplementary rate (~1.25%); your insurer’s rate may differ slightly. Income tax is an approximation.
At €5,000 gross, you take home roughly €3,100 net — around 62% of your brutto.
6. How to Check and Change Your Tax Class
Your current tax class appears on your monthly payslip (Gehaltsabrechnung). Your employer accesses your tax information through the electronic income tax system (ELStAM) — you do not receive a physical tax card.
To change your tax class, apply to your local tax office (Finanzamt) — either online via the official tax portal elster.de or by submitting the paper form Antrag auf Steuerklassenwechsel. You can change your tax class once per calendar year, with exceptions for major life events like marriage, separation, or the birth of a child.
A few common situations:
• Just arrived and no tax ID yet? Complete your Anmeldung first (→ How to Do Your Anmeldung in Germany — link to be embedded) — your Steuer-ID follows in the post within a few weeks.
• Just married? You’re automatically placed in Class 4/4. Apply for Class 3/5 at the Finanzamt if your incomes differ significantly.
• Separated or divorced? Notify your Finanzamt — you’ll move back to Class 1 (or Class 2 if you have children at home).
• Second job? Your second employer automatically applies Class 6. There’s no way around this for a secondary position.
7. The Bottom Line
The gap between brutto and netto in Germany is real, and it is significant. But what you get in return — public healthcare, a state pension, unemployment protection, and long-term care coverage — is a genuine social safety net that most people, especially expats, end up relying on at some point.
The most important things to sort early:
• Do your Anmeldung and pass your Steuer-ID to your employer immediately — do not stay in Tax Class 6 longer than necessary.
• Check whether your tax class suits your situation, especially if you’re married.
• Always negotiate your salary on gross. Always plan your budget on net.
Germany’s payslip can look intimidating at first. Once you know what each line means, it’s actually one of the more transparent systems in Europe.
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