The wage tax is deducted from wages for income from employment. Wages are all income that the employee receives from the employment relationship or from a previous employment relationship. The income does not only include cash payments, but also benefits in kind (e.g. free meals and accommodation provided by the employer) and other monetary benefits (e.g. private use of a company car). Furthermore, it does not depend on whether it is a one-off or ongoing income or whether there is a legal claim; the name or form under which the income is granted is also irrelevant. The wages paid by a third party as part of the employment relationship are also subject to wage tax deduction if the employer knows or can recognize that such remuneration is being paid.
The Calculation of the Tax
The wage tax is calculated on the basis of wages so that it corresponds to the income tax that the employee owes if he only earns income from non-self-employed work. Because of the level of income tax, reference is made to the tariff display. The use of the income tax calculator is essential in this case.
- In order to make it easier for the employer to calculate taxes, employees are assigned to different tax brackets according to their personal circumstances. The respective tax class determines whether the basic income tax rate (tax classes I, II, IV) or the splitting procedure (tax class III, V, VI) is to be applied. In addition, certain allowances and lump sums are taken into account in the tax calculation. This is the employee lump sum of 1,000 euros and for pension payments by the pension allowance, the lump sum for income-related expenses of 102 euros as well as the surcharge on the pension allowance (tax classes I to V), the special expenses lump sum of 36 euros (tax classes I to V), the pension lump sum for those to be borne by the employee Pension, health and long-term care insurance contributions (tax classes I to VI) and the relief amount for single parents of EUR 1,308 (tax class II).
Are to be classified in the
Tax class I: single and divorced employees as well as widowed employees, provided they do not fall into tax class II or III
Tax class II: single, divorced and widowed employees who are entitled to the relief amount for single parents. The relief amount for single parents is generally available to a single employee if his household includes at least one child for whom he is entitled to an exemption under Section 32 (6) EStG or for whom he receives child benefit. It is assumed that they belong to the household if the child is registered in the home of the single taxpayer.
Tax class III: married employees, civil partners and widowed employees, but only for the calendar year following the year of death of the spouse / civil partner
Tax class IV: married employees and civil partners, if both spouses / civil partners receive wages
Tax class V: one of the spouses / life partners (in place of tax class IV), if the other spouse / life partner is classified in tax class III
Tax class VI: Employees who receive wages from several employers at the same time. The withholding and payment of wage tax by employers is monitored by the tax authorities of the federal states. The federal and state governments are entitled to 42.5 percent of the wage tax. The municipalities are entitled to 15 percent of the wage tax.
