On the paycheck, all invoices, and your tax return, a distinction is made between gross and net. Many employees notice this difference every month on their bank statement when they realize what is left after income tax and social security contributions.
01.
From gross income to net income
During the negotiations for their job contract, most people try to get a high gross salary. But when they look at their bank statement, they find out that not all the salary is paid out.
Are you employed, unmarried, not in a civil partnership, and earn more than 9,408 euros per year? Then your income is above the basic allowance, and you need to pay taxes.
Your employer subtracts taxes and social security contributions from your earnings to forward it to the relevant offices. This would be the wage or income tax and social security contributions, the solidarity surcharge, and, if applicable, the church tax.
Your social security contributions are also deducted. This includes pension, health, nursing care, and unemployment insurance.
The net salary is the money that ends up in your bank account each month.
02.
What does income mean?
Your gross income
– Income tax (Lohnsteuer): 14-45% The higher the income, the higher the income tax.
– Church tax (Kirchensteuer): 8-9% of the taxable income
– Solidarity surcharge (Solidaritätszuschlag): up to 5,5% of the taxable income
– Health insurance contribution (Krankenkassenbeitrag): 7,3% + Additional contribution from earnings
– Nursing care insurance (Pflegeversicherung): 1.525%, 2,025% in Saxony, Possible supplement to earnings
– Unemployment Insurance (Arbeitslosenversicherung): 1.25 % of earnings (as of 2019-01-01), 1.2 % as of 2020-01-01
– Pension Insurance (Rentenversicherung): 9,3 % of earnings
= Your net income
03.
Calculate what you could get back from taxes
Do you want to get a good estimation on how much you’re going to get back from tax office?
Our tax calculator can tell you exactly that!