Steuerklasse

Steuerklasse is a set of six categories used in Germany to determine the rate of wage tax (Lohnsteuer) withheld from an employee’s paycheck. The classification reflects personal and family circumstances and influences monthly tax withholding, while the final tax liability is determined over the year in the tax return. The main classes are I to VI, with specific rules for who qualifies for each.

Steuerklasse I applies to single, separated, or widowed persons who do not have a marriage-based arrangement. Steuerklasse II is for single parents who live with at least one child and qualify for additional relief. Steuerklasse III is used by married couples when the other spouse is in Steuerklasse V or when one partner earns significantly more; it reduces the withholding for the higher earner. Steuerklasse IV is intended for married couples where both partners work and have similar incomes. Steuerklasse IV with Faktor (IV/Faktor) is a variant of IV that uses a calculated factor to distribute the joint tax burden more evenly between spouses. Steuerklasse V is generally chosen by the lower-earning spouse in combination with III, resulting in higher withholding for that partner. Steuerklasse VI is used for individuals with more than one job; it has no basic tax allowances and withholds at a higher rate.

The classification affects monthly withholding but not the final liability; an annual tax return may adjust any differences. Changes in life circumstances, such as marriage, divorce, or birth of a child, can trigger a change in tax class, usually requested through the employer and/or the tax authorities. In practice, Steuerklasse interacts with other elements of the German tax system, including church tax and solidarity surcharge, and works together with tax credits and the general tax-free allowance (Grundfreibetrag).