How income tax works in Germany: the formula, splitting and the Soli
German income tax is a smooth formula, not a set of steps, and it is worked out on taxable income.
Germany calculates income tax on your taxable income (zu versteuerndes Einkommen) with a formula that rises smoothly instead of jumping at bracket edges. Your taxable income is what is left of your income after deductions such as the employee lump sum, special expenses and pension and insurance contributions.
The 2026 tariff (section 32a)
| Taxable income | Income tax in euros |
|---|---|
| Up to €12,348 | 0 |
| €12,349 to €17,799 | (914.51 × y + 1,400) × y, y = (income − 12,348) ÷ 10,000 |
| €17,800 to €69,878 | (173.10 × z + 2,397) × z + 1,034.87, z = (income − 17,799) ÷ 10,000 |
| €69,879 to €277,825 | 0.42 × income − 11,135.63 |
| From €277,826 | 0.45 × income − 19,470.38 |
Splitting and the solidarity surcharge
Married couples assessed jointly pay twice the tax on half of their combined taxable income (the splitting method). The solidarity surcharge is 5.5% of income tax, but it is only charged on tax above €20,350 (€40,700 for joint assessment), and it never exceeds 11.9% of the amount above that limit. Most taxpayers pay no surcharge.
Worked examples
z = 3.2201, so tax is €10,548. That is below €20,350, so there is no surcharge.
Tax is 0.42 × 100,000 − 11,135.63 = €30,864. The surcharge is the lower of 5.5% × 30,864 = €1,697.52 and 11.9% × (30,864 − 20,350) = €1,251.16, so the surcharge is €1,251.16.
Half is €50,000, which has tax of €10,548, so the couple pay 2 × €10,548 = €21,096, with no surcharge.
✨ Key Takeaways
- German tax is a smooth formula based on taxable income.
- Couples assessed jointly use the splitting method.
- The solidarity surcharge only applies above a limit.
- Check the Bundesfinanzministerium for the current year's figures.