How tax classes affect taxes (Zusammenveranlagung vs. Einzelveranlagung)

What does it actually mean, for example, to be in tax class 3 (Steuerklasse 3)? Or why do I pay so much taxes in tax class 5? Why should married people always file a joint tax return (Zusammenveranlagung)? We looked for the answer to this.

Which tax classes (Steuerklassen) are there in Germany?

There are 6 tax classes (Steuerklassen) in Germany. You are assigned a tax class by your respective tax office (Finanzamt). For example, the tax class allows an employer to calculate an employee’s payroll tax (Lohnsteuer). The tax class that you are assigned mainly depends on your marital status. Single people are assigned to class 1, single parents to class 2 etc. There are special situations for spouses.

Married couple: tax class combination 3 and 5 (Steuerklassenkombination 3 und 5)

For married couples, the combination of tax classes 3 and 5 (Steuerklassenkombination 3 und 5) increases the basic allowance (Grundfreibetrag) and increases to €18,000. This applies to both salaries together. All other allowances (Freibeträge) remain the same, except that the children’s allowance (Kinderfreibetrag) of €7,428 only applies to those partners who are in tax class 3.

Filing jointly (Zusammenveranlagung): Why married couples should file their taxex together

By filing jointly (Zusammenveranlagung), a married couple only have to submit one tax declaration (Steuererklärung). The law then treats both as a single person. This results in spouses receiving only one tax assessment notice (Steuerbescheid). A possible refund will, therefore, only be transferred to one account and can not be divided into two.

If the spouses are assigned tax classes 3 and 5 (Steuerklasse 3 und 5), then it makes sense to file a joint tax return regardless. Assignment to tax classes 3 and 5 is by request. This requires that the spouses have their residence in Germany, they do not live separately and one spouse receives a lower salary than the other.

Spouses will thus be taxed in such a way that no basic allowance (Grundfreibetrag) is recognized in the calculation of income tax in tax class 3, whereas in tax class 5 this is doubled. The person in tax class 5 is taxed at 100%, the person in tax class 3 is left with more net salary (Nettogehalt) because of the allowances (Freibetrag).

The combination 3 and 5 is advisable if the amount of income is approximately a ratio of 60:40 and the high earner decides on tax class 3. The spouse with the lower income is then automatically assigned tax class 5.

Tax class combination 3 and 5 (Steuerklassenkombination 3 und 5): Why filing individually is discouraged

If a married couple chooses the tax class combination 3 and 5 (Steuerklassenkombination 3 und 5), it is inadvisable to make an individual assessment (Einzelveranlagung - spouses must submit their own tax returns). This means they should generally file a tax return (Steuererklärung) together.

Especially, the person assigned tax class 5 must expect to make a possible payment as opposed to a refund (Steuererstattung), because, for example, no allowances (Freibeträge) are recognized. Especially if the partner with tax class 5 (Steuerklasse 5) does not have a job or generally does not earn any income, they should file jointly (Zusammenveranlagung).

Note: In our tool, the spouse must be stated regardless. It does not matter if the partner has not earned any income. Only then can the tax refund amount be calculated correctly.