Tax System 101

The German tax system explained clearly: tax classes, deadlines, and all major tax types. Ideal for immigrants and career starters.

The German Tax System — Clearly Explained for Immigrants

The German tax system is among the most complex in the world — but it follows a clear logic. As an immigrant, you do not need to understand everything at once. Our Tax System 101 explains the most important tax types, tax classes, and deadlines that affect your daily life.

Key Tax Types

Income Tax (§§ 1–46 EStG): The central tax on your income. Progressive rate from 0% to 45%. Basic allowance 2026: EUR 12,084 (§ 32a EStG). Top rate 42% from EUR 68,430; wealth surcharge 45% from EUR 277,826.
Wage Tax (Lohnsteuer): Not a separate tax, but the employer-withheld prepayment toward income tax. Deducted monthly automatically.
Solidarity Surcharge: 5.5% on income tax, but since 2021 only on income tax exceeding approx. EUR 18,130 (exemption threshold, § 3 para. 3 SolZG).
Church Tax: 8% (Bavaria, Baden-Württemberg) or 9% (all other states) of income tax. Only for members of a tax-collecting religious community. Exit at the Standesamt or local court (EUR 10–35 fee).
VAT/MwSt (§§ 1–29 UStG): 19% (standard) or 7% (reduced) on goods and services. For employees, only relevant when shopping.

Tax Classes (§ 38b EStG)

Your tax class determines your monthly wage tax deduction:

Class I: Single, divorced, widowed
Class II: Single parent (relief amount EUR 4,260 + EUR 240 per additional child)
Class III: Married, one partner earns significantly more (combined with V)
Class IV: Married, both earn similarly
Class IV with factor: More precise distribution for married couples
Class V: Married, the lower-earning partner (combined with III)
Class VI: Second and any additional job

Tax ID and Tax Number

Tax ID (IdNr): 11 digits, valid for life, sent automatically after registration. Needed for your employer and tax return.
Tax Number (Steuernummer): Assigned by the tax office when you first file a tax return or register a business. Format varies by state.

Important Deadlines

Tax return (with tax advisor): May 31 of the second following year (e.g., May 31, 2028 for 2026)
Tax return (without advisor): July 31 of the following year (e.g., July 31, 2027 for 2026)
Mandatory filing: Who must file? (§ 46 EStG) — e.g., with tax classes III/V, side income over EUR 410
Objection to tax assessment: 1 month after notification (§ 355 AO)

What Our Tool Explains

Interactive overview of all relevant tax types
Tax class finder: Which class fits you?
Deadline calendar: When do you need to submit what?
Deductible expenses: What can you write off?
Glossary: The 50 most important tax terms in German and English