Introduction
Do you know how much is left of your gross salary in Germany after taxes and social security contributions? If not, you're not alone. It can be difficult to estimate your net salary because it's a complicated calculation.
In this article, we'll use an example to explain how to determine your net salary. In the end, you will be able to calculate your net salary yourself. You can also check your results with our handy income tax calculator .
Choosing our person
Let's consider our hypothetical person:
- a single, childless individual,
- in his/her 30s,
- lives in North Rhine-Westphalia,
- affiliated with a tax collection religious community,
- has a gross yearly salary of €48,000.00,
- pays into the statutory pension and health insurance scheme, with an additional health insurance surcharge of 1.6%.
As this person does not receive any tax-free allowances or additional income throughout the year, their tax situation is relatively straightforward.
Social contributions
In Germany, all full-time employees have to pay social security contributions. The social contributions are divided between employee and employer. The amount to be paid towards social security contributions for both employees and employers is determined based on the gross salary. The employee's social contribution is deducted from the gross salary, whereas the employer's social contribution is an extra cost on top of the gross salary.
In our case the following rates are applicable:
| Description | Rate | Sum |
|---|---|---|
| Gross salary | - | €48,000.00 |
| Pension insurance | 9.30% |
9.30 x 48000 / 100 =
-€4,464.00 |
| Unemployment insurance | 1.30% |
1.30 x 4000 / 100 =
-€624.00 |
| Health care insurance + surcharge | 7.30% + 0.8% |
7.80 x 48000 / 100 =
-€3,888.00 |
| Long term care insurance | 1.525% + 0.35% |
1.875 x 48000 / 100 =
-€900.00 |
| Income after social security deductions | - | ** €38,124.00** |
€38,124.00 remains after deducting the social security contributions from the gross salary of €48,000.00.
Taxable income
Before we can calculate the income tax we need to determine the taxable income, which is the amount after the tax-free allowances are deducted from the gross salary. Based on § Section 39b from the Income Tax Act (EStG), in our case, the following can be deducted:
| Description | Rate | Sum |
|---|---|---|
| Gross Salary | - | €48,000.00 |
| Special expenses lump sum | -€36.00 | |
| Employee lump sum | -€1,200.00 | |
| Pension insurance | 9.30% |
9.30 x 48000 / 100 =
-€4,464.00 |
| Health care insurance + surcharge | 7.00% + 0.8% |
7.80 x 48000 / 100 =
-€3,744.00 |
| Long term care insurance | 1.525% + 0.35% |
1.875 x 48000 / 100 =
-€900.00 |
| Taxable income | - | €37,656.00 |
Unemployment insurance belongs to the other pension expenses and is therefore subject to the € 1,900 maximum deductible limit( § Section 39b, paragraph 2, sentence 5, number 3 and 4 ). The amount of health insurance, health insurance surcharge and nursing care insurance is already above the lump sum of € 1900.00, so unemployment insurance does not affect the taxable income.
As of 2023, the employee's contribution rate to health care insurance is 7.30 %. Based on § Section 10, paragraph 1, number 3, letter a, sentence 4 from the Income Tax Act (EStG), if the employee entitlement to sickness benefit, then only 96% of the health care insurance contribution can be reduced. This leads to 7.00 % (=96 x 7.30 / 1000) instead of 7.30 %.
After deducting all non-taxable amounts from the gross salary of €48,000.00, the remaining taxable annual income is €37,656.00.
Income tax calculation
Now that we know the taxable annual income, we can use § Section 32a from the Income Tax Act to first determine the tariff zone and then calculate the yearly income tax.
In our example, the yearly taxable income of €37,656.00, for the year 2023, falls in the 3rd tariff zone. in this tariff zone, the tax rate increases gradually from 23.97% to 42%, and the income tax can be calculated as
Tax = (192.59 * z + 2397) * z + 966.53
where
z = (Taxable_Income - 15999) / 10000
After inserting €37,656.00 into the equation we end up with a yearly income tax of €7,061.00. You can use our income tax calculator , to double-check the result for the yearly gross salary of €48,000 .
Tax deductions
After deducting social security contributions from the gross salary, we still have to deduct the church tax and the income tax from the €38,124.00. Earlier we determined the yearly income tax, which is €7,061.00, now we just need to calculate the church tax, which is 8 % of the income tax in North Rhine-Westphalia.
| Description | Rate | Sum |
|---|---|---|
| Income after social security deductions | - | €38,124.00 |
| Income tax | -€7,061.00 | |
| Church tax | 8% |
8 x 7061 / 100 =
-€564.88 |
| Yearly net salary | - | €30,498.12 |
A yearly gross salary of €48,000.00 would lead to a yearly net salary of €30,498.12. If you select the same option in our income tax calculator you should reach the same result for a yearly gross salary of €48,000 .
Conclusion
Calculating your net salary in Germany may seem complicated, but with a little guidance, you can determine it yourself. If you subtract all non-taxable amounts from the gross salary, you can determine the taxable income, which you then use to calculate the income tax according to the tariff zone. Finally, when you subtract the income tax, church tax and social security contributions from the gross salary, you will get your net salary. Note that these calculations may vary depending on your specific situation, and it is always advisable to seek advice from a professional.