Income Tax in Germany – Basics

Income tax is a direct tax on your income.

The 7 Types of Income

  1. Employment income (salary)
  2. Self-employment income (freelancers)
  3. Business income (entrepreneurs)
  4. Agriculture and forestry
  5. Capital income (interest, dividends)
  6. Rental income
  7. Other income (pensions)

Tax Rates 2025

Progressive tariff: - 0% up to €12,096 (basic allowance) - 14% - 42% from €12,097 to €68,480 - 42% from €68,481 to €277,825 - 45% from €277,826 (top rate)

Calculation

  1. Total of all income
    • Work expenses, special expenses
    • Allowances
  4. = Taxable income (zvE)
  5. → Income tax according to tariff formula

Payroll Tax

Payroll tax is an advance payment on income tax. Deducted monthly by employer.

Calculate your income tax now: To Tax Calculator