Taxes in Germany have a reputation that is half deserved. The system is rule-bound and the top rates are high, but it is also predictable. Your employer withholds the tax from your salary every month, the tax office has your data electronically, and many employees with one job are not obliged to file. This guide to taxes in Germany concentrates on what a new arrival needs to know in the first year.
When are you a tax resident under German tax rules?
You become subject to German tax on your worldwide income as soon as you have a home in Germany or stay here for more than six months in a row. The law defines a Wohnsitz as a dwelling you occupy in conditions that show you will keep and use it (§ 8 AO), and the usual stay as one that lasts over six months, counted from the first day, with short breaks not counting (§ 9 AO). A stay purely for a holiday, cure or visit that does not exceed one year is excluded.
In practice, German tax residency can start on the day you move in, not only after six months. If your home country also treats you as a resident, the double-taxation treaty between the two countries settles which one can tax what. Your Anmeldung and the date you arrived are the first things the tax office will look at, so keep your registration certificate.
What are the income tax rates for taxes in Germany in 2026?
The 2026 tariff for the Einkommensteuer (§ 32a of the Income Tax Act) applies per person:
- Up to €12,348 of taxable income: 0% (the basic allowance, Grundfreibetrag).
- €12,349 to €69,878: progressive, starting at 14%.
- €69,879 to €277,825: 42%.
- From €277,826: 45%.
Married couples taxed jointly pay twice the tax calculated on half of their combined income (Splitting). On top, the Solidaritätszuschlag of 5.5% of the tax applies only if your tax exceeds €20,350 (€40,700 for a joint return), with a transition zone above; below that threshold you do not pay it. Employees get a flat €1,230 allowance for work-related costs deducted automatically. You claim real costs only if they are higher. If you belong to a church that levies tax, the Kirchensteuer is added: see church tax in Germany.
Germany has no special regime for new arrivals: the Income Tax Act provides none. You are taxed on the normal scale, whatever your nationality.
How do the tax classes work in German taxes?
If you are an employee, your employer withholds Lohnsteuer each month according to your tax class (Steuerklasse, § 38b EStG). The class affects the monthly withholding, not the final annual tax.
- Class I: single, divorced or widowed, or married when neither class III nor IV applies (for example when the spouse is not fully taxable in Germany).
- Class II: single parents entitled to the single-parent allowance.
- Classes III and V: married couples who are both tax residents; on joint request one takes III (low withholding), the other V (high withholding).
- Class IV: married couples, the default, with or without a "factor".
- Class VI: second and further jobs.
If you start work without a tax ID through no fault of your own, your employer can use your expected class for up to three calendar months; if the ID is still missing after that, class VI applies retroactively (§ 39c EStG). Our article on the Steuer-ID explains how to get the number in time. Couples should discuss III/V carefully: it lowers one partner's monthly withholding, but requires a return and can lead to a tax bill.
If you are moving with a partner, have income in several countries or are not sure how your arrival date affects the first year, the choices (tax class, return, treaty) can change what you pay. Moovy, our AI assistant, can walk through the rules in plain English and tell you what to ask a tax adviser. It does not file returns for you.
Do you have to file a tax return, and how?
You must file in certain cases (§ 46 EStG), for instance if you had more than €410 of other income not taxed at source, several employers at the same time, or if you are a couple who both earn a salary and one of you is in class V or VI, or in class IV with a factor. Otherwise a return is voluntary, and often useful for a refund. You have four years from the end of the year concerned to file a voluntary return.
Deadlines: income of 2025 is due on 31 July 2026, or at the end of February 2027 if a Steuerberater (tax adviser) prepares it. Income of 2026 is due on 31 July 2027, or the end of February 2028 with an adviser. When the date falls on a weekend or public holiday, it moves to the next working day: the end of February 2027 is a Sunday, and 31 July 2027 a Saturday. For a compulsory return filed late, the tax office can charge a late-filing surcharge of 0.25% of the tax still due, at least €25, for each month started; after 14 months it becomes automatic, unless the tax is zero or already covered by withholding (§ 152 AO).
To file, create a Mein ELSTER account, free of charge. You need your Steuer-ID, date of birth and an email address. You receive a login by email and an activation code by post, at the address the registration office knows, within a few days, so make sure your name is on the letterbox. Many people also use an adviser or a wage-tax assistance association (Lohnsteuerhilfeverein) for their first return.
The year you arrive deserves a return in many cases: monthly withholding assumes a full year of salary. Foreign income that Germany does not tax, such as what you earned before arriving that year or income exempted by a treaty, can still raise the rate applied to your German income (Progressionsvorbehalt, § 32b EStG).
How does the double-taxation treaty work?
When two countries claim you as a resident, the treaty applies tie-break rules in this order: where you have a permanent home, then where your personal and economic ties are closer, then where you habitually live, then nationality, and as a last resort an agreement between the two tax authorities. Each type of income has its own rule. Salary is in principle taxable where you work. Pensions, property income, dividends and self-employed profits each follow the treaty text.
Examples from the treaties: under the 1959 France-Germany treaty, border workers living and working within the frontier zones are taxed only in their country of residence; under the UK-Germany treaty of 2010, a State Pension is taxable only in the country that pays it, while a private pension is generally taxed where you live. The treaty list is on the Federal Ministry of Finance website. Teleworking from Germany for a foreign employer is usually taxable where you physically work, which is often Germany.
How do taxes in Germany work for employees?
Employees pay income tax through payroll withholding (Lohnsteuer), together with social contributions. Your employer sends your pay and withheld tax electronically to the tax authorities and gives you an annual statement, the Lohnsteuerbescheinigung, with the total pay and tax. Keep it: it is what you use to complete a return. If your real costs are higher than the €1,230 allowance (commuting, training, childcare, donations), keep receipts and claim them in your return. Do not send them unless the tax office asks.
What about taxes in Germany for cross-border workers and non-residents?
If you work in Germany but live elsewhere, you are taxed only on your German income (§ 1 para. 4 EStG). If at least 90% of your income is taxable in Germany, or your non-German income does not exceed the basic allowance, you may ask to be treated as a resident, with a certificate from your foreign tax office (§ 1 para. 3 EStG). For French–German border workers, the treaty can tax you only where you live, with specific forms: form 5011 for those who live in France and work in Germany, S 2-240 for the reverse. A German employer needs a certificate of exemption (Freistellungsbescheinigung) from the German tax office before paying you, so that no German withholding is taken.
How are savings and investment income taxed?
Interest and dividends are subject to a flat withholding tax (Abgeltungsteuer) of 25%, taken by your bank, above an annual allowance of €1,000 (€2,000 for a couple). Church tax is added if you belong to a church that levies it. Declare foreign income, even if tax was paid abroad, and use the treaty to avoid double tax.
What should you do in your first year?
- Note your arrival date and keep your Anmeldung: they decide when your residence starts.
- Give your employer your Steuer-ID as soon as it arrives, to avoid class VI.
- Keep papers from the country you left, because the German tax office may ask what you earned there in the months before you arrived.
- File a return for the year of arrival, which can bring a refund and is sometimes compulsory.
Before you decide on your tax class, a joint return or how to treat income from your home country, have your situation confirmed by a tax adviser (Steuerberater) or a wage-tax assistance association (Lohnsteuerhilfeverein) in Germany.