What are the different Tax Categories of the German Wage Tax system?

The German Wage Tax System is differentiating between 6 Tax Classes, depending to the living-circumstances of the employees.

Tax Class I: Single, separated or married not living together who don’t fall into the Class II or III.

Tax Class II: Single or separated people living with their children, who are entitled to a children's allowance.

Tax Class III: For people who are married, husband and wife are living together. Very interesting for people who are married and one of them has a high income while the other one has no income or a low income. Ideally the person with the low income will have Tax Class V and the other Tax Class III.

Tax Class IV: For people who are married, husband and wife are living together. Ideally for married employees while both of them receive similar wages. Both will then have Tax Class IV.

Tax Class V:For people who are married, husband and wife are living together. One of them has a Tax Card of Class III (form more information refer to Tax Class III).

Tax Class VI: For employees who have more than one employer, receiving wages from different employments will need a second or third, or… tax card of Tax Class VI. Ideally the employment with the lower income will get Tax Class VI.

When applying for your German mortgage, our experts will review your payslips to ensure that you are in the correct tax class, being in the wrong tax class can decrease your net-income and a correction can significantly increase your eligibility.

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