Wage Tax & Tax Class (Lohnsteuer, Steuerklasse)

At a glance

• Lohnsteuer is a prepayment on income tax; the employer withholds it from gross pay and remits it to the tax office
• There are six tax classes (I–VI) that scale the wage-tax deduction by marital status and secondary employment
• The relevant features are provided electronically as ELStAM (electronic wage-tax deduction features) and retrieved by the employer
• A solidarity surcharge (Solidaritätszuschlag) and church tax (Kirchensteuer) may also be withheld
• The annual income tax return reconciles the withheld wage tax with the actual tax due; the tax class therefore affects liquidity, not the amount of tax

The six tax classes

• Class I: single, divorced, or permanently separated
• Class II: single parents entitled to the relief amount
• Class III: married or partnered person with a clearly higher income (partner in class V)
• Class IV: married or partnered with similar incomes, optionally with a factor
• Class V: counterpart to class III, for the lower earner
• Class VI: for a second and any further employment

What the tax class does, and what it does not

The tax class determines how much wage tax is withheld each month. It does not determine the eventual tax burden.

Anyone who files an income tax return pays the same amount across the year regardless of the class chosen. The class only shifts when the money moves: either less withheld monthly and a payment due later, or more withheld monthly and a refund later. The tax class is a liquidity question, not a tax-saving one.

For married couples this holds for the combined burden. The III/V combination distributes it very unevenly between the partners, which can matter where finances are kept separate. The annual assessment evens it out again.

Two exceptions matter, because they are often missed:

• Wage replacement benefits are calculated on net pay. Elterngeld, Krankengeld, Arbeitslosengeld, and Mutterschaftsgeld are therefore higher where a more favourable class applied beforehand. Changing class in good time can genuinely make a difference here, but deadlines and anti-abuse limits apply
• Where no return is filed, the amount withheld is final. With the III/V combination, however, filing is mandatory anyway

FAQ

Does the right tax class save me tax?

No. Where an income tax return is filed, the annual tax is the same regardless of class. Only monthly liquidity up to the tax assessment is affected. It is different for wage replacement benefits such as Elterngeld or Krankengeld, which are based on net pay.

What is the difference between Lohnsteuer and Einkommensteuer?

Lohnsteuer is not a separate tax but the prepayment on income tax collected from wages. The income tax return then checks whether too much or too little was withheld; the difference is refunded or claimed back.

What are ELStAM?

ELStAM are the electronic wage-tax deduction features: tax class, child allowances, the church-tax marker, and any registered allowances. The employer retrieves them electronically from the tax authority; they have replaced the former paper wage-tax card.

Will tax classes III and V be abolished?

An abolition was planned for 1 January 2030, moving to the factor procedure (Faktorverfahren) in class IV. This was not enacted; as of August 2026 there is no binding date and no new law. Classes III and V remain selectable for now.

Why are Solidaritätszuschlag and Kirchensteuer withheld?

Since 2021 the solidarity surcharge applies only to higher incomes. Church tax is withheld only where a church-tax liability exists; depending on the federal state it is 8 or 9 percent of the wage tax.

Last updated: August 2026

This article provides general information and is not a substitute for legal advice in individual cases.