Deductions and tax and social security contributions from salaries in Germany, Gross-Net Salary

§ Gross and Net Salary in Germany

Gross salary (Bruttogehalt) is the employee's earned wage, usually monthly, from which no taxes and social contributions have been deducted. This is the wage amount that the employee has agreed upon with the employer and is documented in the employment contract.

Net salary (Nettogehalt) is the employee's wage that they actually receive from the employer, either deposited into their bank account or paid in cash. This is the remaining salary after deducting taxes and social contributions, which the employer will transfer to the tax office.

Formula for Gross/Net Salary

Gross Salary - Taxes and Social Contributions = Net Salary

§ List of Deductions from Salary in Germany

From the employee's gross salary in Germany, taxes and social contributions are deducted. After deductions, the employee receives the remaining amount into their bank account, known as the net salary. The employee's salary is subject to income tax and supplements, as well as contributions to health and pension insurance, care insurance, and unemployment insurance. Insurance contributions have legally established limits for maximum contribution amounts.

In the following list, you will learn about the deductions from the salary of an employed worker in Germany. Further down on the page, you will find more detailed information about these deductions and examples of calculation.

List of deductions from the salary of an employed worker in Germany for 2024

• Income tax, ranging from 14% to 45% of the gross salary;
• Church tax, 8-9% of the income tax;
• Solidarity surcharge, 5.5% of the income tax;
• Health insurance, 14.6% of the gross salary
  (7.3% paid by the employee, 7.3% paid by the employer);
• Additional contribution to health insurance, 1.7% of the gross salary
  (0.85% paid by the employee, 0.85% paid by the employer);
• Pension insurance, 18.6% of the gross salary
  (9.30% paid by the employee, 9.30% paid by the employer);
• Care insurance, 3.4%-4.0% (or less) of the gross salary
  (1.70% or less paid by the employer);
• Unemployment insurance, 2.6% of the gross salary
  (1.30% paid by the employee, 1.30% paid by the employer).

§ Calculation Examples of Deductions from Salary

In the following Table 1, we have provided examples of calculating the net salary for an employee whose gross salary is 4,000.00, 3,000.00, or 1,500.00 euros. The employee has no children, is assigned to tax class 1, and resides in the western part of Germany. In this case, the deductions from the salary would look like this:

Table 1. Examples of calculating monthly gross-net salary for 2024

The absolute accuracy of the net salary calculation is not guaranteed.

§ Contribution Limits to Social Allowances (Beitragsbemessungsgrenze)

Typically, salary deductions in Germany are calculated as a percentage of the gross salary. However, for most deductions, there are either tax-free allowance or maximum limits.

For instance, income tax is not applicable to earned annual income below 11'604.00 euros (for the year 2024). Only when the income exceeds this amount does the individual start paying income tax.

When making contributions to state health insurance, there is a maximum income level subject to insurance contributions (Beitragsbemessungsgrenze). An employee is only assessed a contribution to health insurance on a salary up to 5'175.00 euros per month (for the year 2024); if they earn more, no fee is calculated on the remaining amount.

Information on bonuses and subsidies to salary in Germany can be found on a separate page.

§ Taxes on Salary in Germany

The primary tax deducted from an employee's salary is payroll tax (wage tax). It is calculated as a percentage of the gross salary. Other taxes are optionally levied under certain conditions and calculated as a percentage of the income tax./p>

Payroll tax (wage tax)

Payroll tax is a unique form of income tax in Germany. The employer deducts income tax from the employee's salary and transfers it to the tax office. In Germany, this tax rate ranges from 14% to 45% of the gross salary. The higher a person earns, the higher the tax rate they pay. For more details on income tax, read the following links: what is payroll tax, payroll tax rates in Germany, payroll tax classes, non-taxable income in Germany, taxation of foreign workers in Germany.

Solidarity Surcharge

The solidarity surcharge (Soli) is 5.5% (or less) of the amount withheld from the employee's income tax. This surcharge applies only to high-income earners. Most employees are exempt from paying the solidarity surcharge.

Church Tax

The church tax is 8-9% of the amount withheld from the employee's income tax. Employees belonging to specific churches entitled to receive this church tax pay it. For example, the Catholic Church, the Protestant Church, and some other religious communities.

§ Social Contributions from Salary in Germany

Social contributions (Sozialversicherungsbeiträge) in Germany include health insurance, pension insurance, and long-term care insurance. Contribution amounts are usually split evenly between employers and employees. For example, if an employee is assessed an insurance fee of 500 euros, 250 euros will be deducted from the employee's salary, and the employer will pay the remaining 250 euros from their funds.

Health Insurance (Krankenversicherung)

Health insurance is mandatory in Germany. An employee can choose between private and statutory health insurance.

Employees with statutory health insurance pay a legally defined contribution from the gross salary.

For the year 2024, the contribution to health insurance in Germany is 14.6% of the gross salary, with 7.3% paid by the employee from their salary, and the remaining, 7.3% paid by the employer.

In addition, individual insurance companies may charge an additional insurance fee (Zusatzbeitrag), which averages 1.7% of the salary. This additional fee is also paid proportionally by employees and employers.

Pension Insurance (Rentenversicherung)

Employees in Germany pay contributions to statutory pension insurance from their salary. The contribution rate for the year 2024 is 18.6% of the gross salary, with 9.30% paid by the employee, and 9.30% paid by the employer.

Long-term Care Insurance (Pflegeversicherung)

Long-term care insurance is another form of mandatory insurance. The contribution rate for the year 2024 is 3.4% of the gross salary or less for employees with children. The exact contribution amount depends on the number of children. For childless employees, the contribution rate is 4.0%.

The employer pays 1.70% or less, depending on the number of children.

Unemployment Insurance (Arbeitslosenversicherung)

Unemployment insurance is also mandatory insurance, with a contribution rate of 2.6% of the gross salary. The employee pays 1.30%, and the employer pays the remaining 1.30%.

Tax deductions and social security contributions from salaries in Germany