How to Better Understand Your German Payslip (2024)

It’s a beautiful thing when your salary hits your account each month. But when you’re reading through your payslip, you may notice some hefty deductions—including taxes, social security contributions and more. So what do they mean, and where’s all that money going anyway?

We get it—learning to interpret your payslip may not be exciting. But wrapping your head around these deductions is an important part of understanding your income, as well as what benefits you might be entitled to later on. Don’t worry, we promise to keep it short and simple. Let’s go!

What’s a payslip?

A payslip—or Lohnabrechnung in German—is the piece of paper that shows you how your wages or salary is structured. You can see what deductions are taken from your gross salary (a.k.a. your before-tax income) and what your net salary will be (a.k.a. your take-home earnings). Your employer is legally obliged to issue payslips to you, and they have to keep them for a total of six years—meaning you can still request missing payslips from previous employers.

When reviewing your payslip, it’s important to bear in mind the difference between a salary and hourly pay. Are you paid based on the number of hours you’ve worked? This means that you’re earning an hourly wage—so the amount on your payslip will depend on how many hours you worked that month. When you receive a salary, you’re paid a fixed amount for your job. This means you’ll be paid the same amount every month into your salary account. Although you’re likely aware of whether you’re an hourly or salaried employee, this information will also appear on the first page of your payslip. To make things simpler here, we’ll use the term “salary” to talk about any wages earned.

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How is my payslip structured?

At first, a payslip can seem rather complicated. This is largely due to the fact that many legal obligations need to be met in one document. Let’s go through them step-by-step.

Your payslip needs to include information that identifies you and your employer, as well as more general information on your salary, tax contributions, and so on. This information can help you understand where your money is actually going in detail.

Generally speaking, your payslip is divided into three different sections. The first section includes important information such as the name and address of you and your employer, a reference number and issuing date, your tax ID and social security number, as well as your job title.

The middle section is a bit more complex. Here you can find details on:

  • Your gross income (Bruttogehalt)
  • Non-cash benefits, such as gym memberships (Sachbezüge)
  • Financial benefits (Geldwerte Vorteile)
  • Capital-forming benefits that your employer creates for you (Vermögenswirksame Leistungen)
  • Contributions to company pension schemes (Altersvorsorge)
  • Tax allowances (Steuerfreibeträge)
  • Your income tax (Lohnsteuer)
  • Your church tax deduction (Kirchensteuer), if applicable
  • The solidarity surcharge (Solidaritätszuschlag), if applicable
  • Your social security contributions (Sozialversicherungsbeiträge)
  • Personal deductions (Persönliche Abzüge)
  • Expense allowances (Aufwandsentschädigungen)
  • Amount paid out, also known as your net income (Auszahlungsbetrag)

In the last section you can find your bank account information, the total net salary paid by the employer, and your statement of earnings.

So, where does all this money go?

As you can see, there are quite a few deductions that reduce your gross income. Your income tax (Lohnsteuer), the solidarity surcharge (Solidaritätszuschlag), and the church tax (Kirchensteuer) go directly to the tax office, whereas your social security contributions —including health insurance, pension contributions, nursing care, and unemployment insurancewill be forwarded to the relevant social insurance institutions. Although the amount of taxes you pay may seem high at first, keep in mind that sooner or later, you’ll be quite thankful for your pension and/or unemployment insurance.

How are my deductions calculated?

In simple terms, your taxes and contributions are calculated as a percentage of your total gross salary (Bruttogehalt). Your income tax rate (normally between 15% and 45%) is determined by your tax bracket in Germany—more on that later.

Your income tax amount then defines how high your church tax and solidarity surcharges will be. The solidarity surcharge (Solidaritätszuschlag) is 3.5% of your income tax amount. But since 2021, most German residents are exempt from paying this contribution. Are you registered as a member of a state-recognized religious organization? Then you’ll pay another 9% of your income tax amount—or 8% in Bavaria and Baden-Wuerttemberg—as your church tax (Kirchensteuer, or KiSt on your payslip).

For your social security and pension contributions (Sozialversicherung, or SV on your payslip), a fixed percentage is deducted from your gross salary. As of 2021, 14.6% of your gross salary is deducted for statutory health insurance contributions (Krankenversicherung, or KV-Beitrag on your payslip), and 18.6% is deducted for public pension contributions (Retenversicherung, or RV-Beitrag on your payslip).

There’s also a 2.5% deduction for unemployment insurance (Arbeitslosenversicherung, or AV-Beitrag on your payslip) and a 3.05% deduction for long-term care insurance (Pflegeversicherung, or PV-Beitrag on your payslip). But it’s not all bad—with a few exceptions, 50% of your social security contributions are covered by the employer, and 50% by you, the employee.

What are the different income tax classes?

As you might have already caught on, your income tax class plays a big role in how much net income you’ll end up taking home. In Germany, we have six different income tax classes:

  • Income tax class 1: Single person (single, unmarried, widowed, divorced)
  • Income tax class 2: Single person with at least one minor child
  • Income tax class 3: Married, widowed, or common-law partnerships (only possible in combination with tax class 5)
  • Income tax class 4: Married or common-law couples, who both chose tax class 4 (this tax class is ideal for partners earning roughly the same amount)
  • Income tax class 5: Married or common-law partnerships, where the other partner files in tax class 3 (the partner who earns less should file in tax class 5)
  • Income tax class 6: Person (single, married, common-law partnership) with two or more jobs (the second job always falls into this category)

Should I keep my payslip?

Absolutely! Whether you store it online or in your file cabinet, you should always keep a copy of your payslip in Germany. Those documents are essential proof of the number of years you’ve worked and the social security contributions you’ve paid—which is especially important when it comes to your retirement. As mentioned above, your employer is required to keep your payslips for six years. So even if you’ve misplaced a few, you can still ask former employers for a copy. It’s worth noting that it’s your responsibility to actively request your payslip if you don’t receive it. In addition to keeping it for your records, you’ll need it each year to file your tax declaration—and hopefully some tax refunds.

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How to Better Understand Your German Payslip (2024)

FAQs

How do I check my payslip in Germany? ›

German Payslip Explained: How to read your Payslip in Germany?
  1. Personal Information. Arbeitnehmer Nr. or Personal-Nr. – Employee number. Geburtsdatum – Date of birth. ...
  2. Salary Information. Not all terms listed below will appear on your payslip. Some might only appear on specific months, depending on bonuses, etc. Earnings.

Why is it important to understand how do you read your payslip? ›

Your payslip contains important information, including your payroll number, your gross and net pay, and normally your tax code. It's important to understand your payslip and how to make sure you're being paid the right amount.

What is the church tax on a German payslip? ›

Around half of German tax payers pay the church tax. The church tax is 8% of your income tax in Bavaria and Baden-Württemberg, and 9% in the rest of Germany. If you earn 50,000€/year in Berlin, you would pay around 800€ in church tax. Use my tax calculator to know how much church tax you should pay.

What is a German salary payslip? ›

The payslip (known as a Lohnabrechnung, Gehaltsabrechnung or Entgeltabrechnung in Germany) is a document that has all the info about an employee's salary, tax and social security contributions.

What is considered a good salary in Germany? ›

Considering the salary increase from 2021 to 2022 (from €47,700 to €53,000; approximately 11.11%), it would be safe to say that a “good” salary in Germany in 2022 stands at around €71,000.

Is 3000 euro a good salary in Germany? ›

In Germany, the net monthly salary between 2,500 EUR and 3,000 EUR is good, and over 3,500 EUR is very good. The average gross wage in Germany in 2022 is 51,010 EUR or 31,386 EUR after-tax for a single person. This translates to a 2,615 EUR net monthly salary.

How do I understand my pay stub? ›

Your pay stub contains three main sections: how much you are being paid, the taxes you are paying, and any other deductions that are being made. Pay attention to your gross, year-to-date, and net earnings. The deductions that relate to taxes are generally the most confusing, particularly those related to FICA.

What do the codes mean on my paystub? ›

Here are some of the most common pay stub deduction codes, demystified: FED, FIT or FITW: Federal income taxes. STATE, SIT or SITW: State income taxes. OASDI, FICA, SS or SOCSEC: Social Security payments. MED: Medicare taxes.

How can understanding a pay stub help you? ›

A pay stub also lists gross and net income to-date. This means you know exactly how much money you are taking home. This allows you to accurately and confidently plan your monthly and yearly budgets.

Is it mandatory to pay church tax in Germany? ›

The church tax is only paid by members of the respective church. People who are not members of a church tax-collecting denomination do not have to pay it. Members of a religious community under public law may formally declare their wish to leave the community to state (not religious) authorities.

Why do Germans pay church tax? ›

Church tax in Germany dates back to the 19th century. Modern church tax, however, is designated to the members of a particular religious group to pay for the public services that religious group provides. These services may include baptisms, marriages or religious burials.

What is Lohnsteuer in Germany? ›

Lohnsteuer (wage tax) is an advance on Einkommensteuer (income tax) paid by the employer for his or her employee for payment and geldwerte Vorteile (benefits in kind/non-cash benefits). The wage tax is thus a direct tax levied on income from employment.

What are the payroll rules in Germany? ›

PAYROLL IN GERMANY: THE ESSENTIALS

Workers are limited to a maximum of 8 hours per day, of which can be extended up to 10 for overtime, and 36-40 hours per week, no more than 45 with overtime. The country uses a common monthly payroll cycle, the payment usually being made at the end of the month.

What is the salary of a W2 position in Germany? ›

W2 professorships are regular positions for researchers who independently carry out research and teaching. Initially, the monthly gross basic salary is between approximately 5,400 euros and 6,700 euros.

What is the minimum wage in Germany in US dollars? ›

Germany raised its national minimum wage from $10.76 per hour to $13.15 per hour in October 2022, amounting to nearly a salary of $2,280 for a full-time job for all workers above 18, making Germany the country with the highest minimum wage after Luxembourg in Europe.

How can I check my pay stubs? ›

You can retrieve a pay stub from a bank, especially if you receive direct deposits from your employer. You typically submit a request to your bank and it can retrieve the pay stub for you. You can also retrieve your pay stub directly from your employer's employee website or from the payroll department.

How do I check my right to work in Germany? ›

To be allowed to live and work there legally, you must have a German work and residence permit. You don't have to apply for a German work permit separately from a residence permit; you get them both through a single application at the German Immigration Authority Office (Ausländerbehörde).

How do I find my payslips on ESR? ›

http://my.esr.nhs.uk

At any point you can return to the Portal by selecting the Portal icon from the blue ribbon at the top of the page. When prompted enter your username and password or login via your smartcard. From the portal page, within the My Payslip and P60 portlet, select View My Payslips.

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