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Last updated at
October 28, 2025
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Book NowGermany’s system of personal income tax will apply on all resident and non-resident individuals who earn income in the country. It is progressive with rates of 0 to 45 percent plus a 5.5 percent solidarity surcharge on the income tax for 2025. Residents will be taxed on worldwide income and non-residents, on income sourced in Germany. The aim is to ensure fairness of taxation and provide government revenue for public services. The filing deadline without a tax advisor will be 31 July 2026 and with a tax advisor it will be 28 February 2027. This blog will cover the rates of personal income tax, the deductions, the allowances, the estimated tax payments, the tax classes, the incentives, the importance of records, and the compliance rules of Germany.
Germany applies a progressive personal income tax system for 2025 that will charge individuals based on the level of their income. The system will increase the rate as income rises to ensure fairness and proper contribution to public revenue. For married couples filing jointly, the thresholds of income will be doubled while the same progressive rates will apply. The rates for single taxpayers are as follows:
Income up to €12,096 will be taxed at 0 percent with no tax due.
Income from €12,097 to €68,429 will be taxed starting at 14 percent and rising gradually to 42 percent.
Income from €68,430 to €277,825 will be taxed at a flat rate of 42 percent.
Income above €277,825 will be taxed at 45 percent.
The 5.5 percent solidarity surcharge will apply only on the income tax amount for taxpayers whose income tax exceeds €16,956 (single) or €33,912 (married).
Personal income tax in Germany will apply to all individuals who earn a taxable income in the country. The tax will cover residents on the total of their worldwide income and non-residents only on the income sourced in Germany. New residents will be subject to taxation from the first year of arrival. The categories of individuals required to pay will include:
Residents: An individual who will live in Germany for more than 183 days in a year will be taxed on the total of the worldwide income earned during that year and will report all sources of income on the tax return.
Non-residents: An individual who will reside in Germany for less than 183 days in a year will be taxed only on the income earned from sources in Germany and will report only the income sourced in the country.
New residents: An individual who will arrive in Germany will be subject to taxation from the first year of presence and will report all taxable income earned during that year.
To reduce taxable income, Germany offers various deductions and allowances:
Basic Exemption: An amount of €12,096 will apply to a single individual and an amount of €24,192 will apply to a married couple to reduce the total of taxable income.
Pension Contributions: Contributions to statutory pension insurance and Rürup pensions are deductible up to €29,344 for a single individual and €58,688 for a married couple filing jointly. These contributions are fully tax-deductible and reduce taxable income.
Work-Related Expenses: Costs of commuting, the purchase of professional tools, and other necessary work-related items will reduce the total of a taxpayer’s taxable income.
Charitable Donations: Donations made to organizations approved by the authorities will qualify for deductions on the tax return.
Family Allowances: Child support payments and additional allowances for a single parent will apply to reduce taxable income.
Germany uses a system of six tax classes that will determine the amount of tax withheld on the salaries of individuals. Choosing the correct class will help ensure that the deductions on a taxpayer’s salary will be accurate and will prevent underpayment or overpayment of taxes during the year. Each class will reflect the personal and family situation of a taxpayer and will affect the calculation of allowances and applicable deductions on the income:
Class I: Applies to a single individual with no dependents.
Class II: Applies to a single parent who will claim allowances for dependent children.
Class III: Applies to a married individual with a higher income than the spouse.
Class IV: Applies to married individuals with similar incomes on both sides.
Class V: Applies to a married individual with a lower income than the spouse.
Class VI: Applies to individuals who will earn from multiple jobs and require separate withholding for each.
Germany will provide several tax incentives and benefits to reduce the overall tax liability of individuals and families. These measures will apply on specific expenses and investments of a taxpayer and will help retain more of the earnings while supporting actions that benefit society and the environment.
This includes:
Child Benefits: A payment of €255 per month will be provided for each child in the household and will be counted in the annual tax calculations.
Educational Expenses: Costs of further education, professional training, or skill development directly related to current employment will qualify for deductions on the taxable income.
Investment in Renewable Energy: Tax benefits will apply for approved projects that invest in renewable energy and support sustainable practices on the property or business.
Maintaining records of all income, a full account of expenses, and a list of deductions will be necessary for all taxpayers in Germany. Documentation of receipts, invoices, and statements will ensure correct reporting on the tax return and reduce issues with the authorities on audits or reviews.
Why it matters:
Records of all income will verify the amounts reported on the tax return and confirm the accuracy of taxable income.
Detailed accounts of expenses and deductions will support claims and prevent mistakes in reporting on the return.
Receipts, invoices, and statements will provide evidence for audits conducted by the tax authorities.
A certified tax advisor will confirm calculations of taxable income, allowances, and deductions are correct on the filing.
Timely submissions of the return will avoid penalties or interest applied on underreported amounts of tax.
For 2025, the system of personal income tax in Germany will impose progressive rates of 0 to 45 percent with a solidarity surcharge of 5.5 percent on higher incomes. A taxpayer will reduce the liability through the use of exemptions, deductions, and incentives on pension contributions, charitable donations, and family allowances. Compliance will require the filing of a return on 31 July 2026 for individuals without a tax advisor and on 28 February 2027 for individuals with a tax advisor. The keeping of proper records and the making of estimated payments when required will prevent penalties or interest on unpaid amounts.
What are the personal income tax rates of Germany for 2025?
The rates of personal income tax in Germany for 2025 will range from 0 percent to 45 percent depending on the level of a taxpayer’s income.
Who will pay personal income tax in Germany?
A resident of Germany will be taxed on the total of their worldwide income and a non-resident will be taxed on the income earned on sources within Germany.
When is the due date of a personal income tax return?
The submission of a personal income tax return will be required on 31 July 2026 for individuals without a tax advisor and will extend to 28 February 2027 for individuals who will use a tax advisor.
Are deductions available to reduce a tax liability?
Yes, deductions will apply on the contributions to a pension, work-related expenses, and donations to charitable organizations approved by the authorities.
What are the tax classes of Germany?
There are six tax classes of Germany and each will reflect the personal and family situation of a taxpayer, determining the amount of tax withheld on salaries.
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