The 6 Tax Classes in Germany
The German tax system uses six tax classes that determine how much income tax is deducted monthly. The tax class affects monthly distribution, not the annual total tax burden.
Class I -- Standard for Singles
Class I is the most common tax class, applying automatically to all single, divorced, or permanently separated employees. At 3,500 EUR gross, about 2,350 EUR remains as net pay.
Class II -- Single Parents
Class II provides an additional relief amount of 4,260 EUR (plus 240 EUR per additional child), resulting in 60-120 EUR more net pay per month compared to Class I.
Class III -- Married (Higher Earner)
Class III applies the double basic allowance through income splitting, significantly reducing monthly deductions for the higher-earning partner.
Class IV -- Married (Equal Income)
When both partners earn similarly, Class IV/IV distributes the tax burden equally. The IV-Faktor option since 2010 allows for more precise distribution.
Class V & VI
Class V is the counterpart to Class III with higher deductions. Class VI applies to second jobs with no allowances.
Which Combination Is Best?
If one partner earns less than 40% of combined income, III/V is usually better. For similar incomes, IV/IV or IV-Faktor is recommended.