In tax class three, employees expect the lowest taxes. But what are the requirements for this tax class?
The German tax system is divided into six different tax classes. But not all tax classes are open to us. Tax class one, for example, is for employees who are single and have no children. If you are married, you automatically come into tax bracket four. This corresponds to tax class one as far as deductions are concerned.
Unless you consciously decide on tax classes three and five. However, these two tax classes are only possible as a combination. The deductions in tax class five consist of 18.6 percent pension insurance, 7.3 percent social security contributions for health insurance, 2.5 percent unemployment insurance and 3.05 percent nursing care insurance as well as a possible 0.35 percent childlessness supplement.
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Up to this point there is no difference to other tax classes. However, tax class five is particularly unattractive because of its few allowances and the resulting high proportion of wage tax that the employer withholds.
In the video: Tax classes 3 and 5: No more splitting for spouses?
Tax classes 3 and 5: No more splitting for spouses?
Is tax class five worth it?
It's clear that as a single you can't just switch to tax class five. And no one would want that because of the high deductions. However, things look completely different if one of the two spouses earns significantly more. The income should be at least ten percent higher, otherwise changing tax classes from four to five and three is definitely not worth it.
If one spouse contributes around 60 percent and the other 40 percent of the household income, the combination of three and five is definitely worthwhile and has a positive effect on the net salary of one of the two spouses.
Although the spouse in tax class five receives a lower net salary at the end of the month, this is offset by the significantly higher salary of the spouse in tax class three.
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Be careful, if the wage tax advance payment is too low, you may be subject to additional payment
However, if married couples have opted for tax classes three and five, that does not mean that they will generally save taxes. Couples may also have to pay additional taxes as part of their joint income tax return. This is because the tax class three and five combination basically only saves on the monthly advance payment, but not on the entire annual tax liability.
And here lies the problem: If you have not paid enough income tax in advance, the tax office will demand additional payment. This mainly happens if the partner in tax class five contributes less than 40 percent of the joint household income.
To avoid this, they shouldTax classes three and five can only be selected if the joint household income is in a ratio of 3:2 –i.e. at 40 and 60 percent. And in reality, this only applies to very few married couples.
