Understanding tax · Jurisdiction DE

Wage tax classes

Wage tax classes steer the monthly withholding. They do not set the income tax that the tax office assesses at the end.

In more detail

As of 2026: section 38b of the Income Tax Act assigns classes I to VI. The broad lines are: I for many single people, II for single parents when further conditions are met, III and V as a combination for a marriage or civil partnership, IV when both do not choose that combination, VI for a further employment. A factor on class IV is a separate choice. Finmon assigns nobody to a class.

Background

A change alters the monthly deduction and therefore often the later refund or extra payment. The tariff rule stays the same. The class is not a discount. Changes and the factor run through the tax administration's procedure, often electronically via ELSTER. Finmon does not file an application.

An example

A couple moves from IV and IV to III and V. In the month, one person receives more and the other less. The couple's tax for the year still follows the tariff and the assessment, not the label of the class. Finmon does not calculate the couple.

A common misconception

The more favourable class lowers the tax the statute places on the income.

It changes how much is withheld in the month. The assessed tax follows the tariff and the income.

Source: EStG § 38b. Last reviewed: 2026-10-27. Editorially reviewed on 2026-10-27. Next review 2027-10-27. Version 0.2.0. Finmon explains. It does not advise. Not investment, tax or legal advice.