How to change your tax class in Germany

If you’ve gotten married or entered into a civil partnership, lots of things in your life may be about to change. Perhaps you’ll move into your first apartment together, or begin to discuss starting a family. But there’s one less-than-romantic topic you may not have thought about: taxes. This topic is worth digging into, though, as it could wind up saving you a great deal of money. 

Or perhaps your life takes another turn, such as a separation, job loss, or having a child. These major life events may also impact your tax class, and mean more savings for you. But when does changing your tax class make the most sense, how does it work, and what else do you need to understand about tax classes in general? Read on to learn all this and much more. 

In Germany, tax payers are categorized into one of six tax classes based on their family situation and employment status. For couples who are married or in civil partnerships, their tax class is some combination of two of these six. Let’s take a look at the different tax classes and who’s in each one.  

• Tax Class 1: People who are single, separated, or widowed 
• Tax Class 2: Single parents
• Tax Class 3: People who are married or in a civil partnership — but note that it’s only possible to be in this class if the other partner has chosen Tax Class 5
• Tax Class 4: People who are married or in a civil partnership and have comparable incomes (for example, if both partners earn €40,000 per year)
• Tax Class 5: Married couples and people in civil partnerships, as long as the other partner has chosen Tax Class 3
• Tax Class 6: People who receive income from more than one employer

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Most of the time, your tax class will be changed automatically when your life circumstances change. Married couples, for example, are automatically placed in Tax Class 4. If you’d prefer to be in another tax class for your marriage or civil partnership, or want to benefit from Tax Class 2 for single parents, then you’ll need to apply for a change of tax class at your local tax office. If your application is approved, then you can look forward to less deducted from your paycheck, a lower tax bill overall, and more money in your account. 

If you want to adjust your tax class, all you need is an active internet connection. The entire process can be done online through Mein ELSTER. Alternatively, you can fill out the online form from the ministry of finance, print it out, sign it, and give it to your local tax office. Generally, you’ll only have to wait a few weeks to learn whether or not your application was successful.  

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If you have a tax class combination of 3 and 4, both partners need to submit an “Application for Tax Class Adjustment for Married Couples” (“Antrag auf Steuerklassen­wechsel bei Ehegatten” in German). But if you’d like to change into Tax Class 4, you can do this automatically. If you do, your partner will be automatically entered into Tax Class 4 as well.  

When it comes to your employer, you don’t need to lift a finger. When your tax class changes, your employer will be automatically informed by the tax authorities. Furthermore, your updated tax class will be registered in ELStAM, the payroll tax deduction database.

Since 2020, married couples and civil partners have been allowed to change their tax class multiple times per year. Currently, there aren’t any other requirements. However, you should definitely make sure that your application for a change of tax class is received by November 30th. This is the only way to ensure that the change can still be enacted in the yearly payroll tax deduction process. Your new tax class will then go into effect at the beginning of the following month. 

When couples decide not to live together, their tax class changes automatically into Tax Class 1 or 2. If you’re divorced and have no children, you’ll be placed in Tax Class 1. If you have at least one child, you’ll be in Tax Class 2. There’s one exception: If you decide, despite your separation, to keep living together during the so-called “separation year” then you can keep your current tax class for the remaining tax year. However, separated couples can also change their tax class without the approval of the other partner — for example, from the less advantageous Tax Class 3 into the more beneficial Tax Class 4. 

Having a child is a thrilling experience that also requires a lot of planning. But have you already thought of changing your tax class? Your parental allowance is based on your gross salary, which means that you’ll get a higher allowance if you’re in a more favorable tax class. Changing your tax class early could earn you up to several hundred euros more per month. Note that the amount of parental allowance you get depends on which tax class was in effect for longer during the entire assessment period. For example, if you’re in the less favorable Tax Class 5, and find out that you’re expecting, then you should switch to Tax Class 3 as soon as possible, as you’ll need to have changed your tax class seven months before the start of your parental leave.  

Are you a single parent? Then Tax Class 2 is the most favorable for you. If you live in a household with at least one child, and are entitled to receive the child allowance or a so-called “Kinderfreibeitrag,” then you can benefit from the tax deductions for single parents in this tax class.  

Now that you’re more familiar with tax classes, maybe it’s time to get better acquainted with your finances too. The good news? We make it easy with N26. Use our Insights feature to see all your finances at a glance. You’ll see how much you’re spending in which categories, so you can spot even more opportunities for savings. Plus, our accounts send you instant push-notifications, so you always know when and where your money is flowing.

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