German payroll & income tax

What are German Payroll Tax Classes and how to change the tax class from 4 to 3?

This article talks about the different tax classes in Germany. Sometimes employees want to have their tax class changed from tax class 4 to tax class 3. This article talks about how to manually apply for this change.

German payroll tax classes

The different family and work situations have been mapped into a total of 6 wage tax classes, into which one is classified as an employee. Married spouses in particular can choose between individual wage tax classes in order to ideally tax their jointly calculated income.
  • Wage tax class 1 - For employees with the marital status single, widowed or separated/divorced.
  • Wage tax class 2 - Wage tax class for single parent employees.
  • Wage tax class 3 - A married employee with child (parental allowance recipient) and only if the spouse has chosen tax class 5.
  • Wage tax class 4 - Married persons with equal income (e.g. both earn 35.000 € / year)
  • Wage tax class 5 - This tax class is to be chosen if both spouses are employed and one of them has chosen tax class 3.
  • Wage tax class 6 - Tax class 6 applies to all employees if they receive wages from more than one employer.

Change your tax class: The application to change tax class from 4 to 3.

You are married and would like to choose a different tax class? You're allowed to do that - just fill out a form, and you're done. But don't worry, even if you haven't chosen the most favorable combination, you won't end up paying a cent more in taxes. Because: The final settlement is only made in the tax return.

Tax bracket selection for spouses.

If only one spouse receives income from employment (e.g. wages or a pension), the lowest income tax is paid for him or her in tax class III. This also applies if the other spouse earns taxable income, for example, a retirement pension.

However, if both spouses receive income from non-self-employment, the choice is more difficult.
Married persons can choose between the tax class combinations:

  • IV / IV or
  • III / V or
  • IV factor / IV factor (the so-called factor method).

When is a tax class change possible?

Since 1.1.2020, spouses and civil partners can change the income tax class several times a year. Unlike in the past, there are no longer any special requirements to be met for this.

Change of tax class in times of ELStAM.

With the changeover to the electronic ELStAM procedure, the previous tax class combinations continue to apply. However, in the case of the factoring procedure, the factor must be applied again each year.

After marriage, both spouses currently automatically receive tax class IV in the ELStAM procedure in all cases, even if one spouse does not receive any salary. If you would like the tax class combination III / V or the factoring procedure, you must apply for this at the tax office.

This is how you change the tax class.

To change your tax class, you can use the official form "Antrag auf Steuerklassenwechsel bei Ehegatten" (Application for a change of tax class for spouses), which must be signed by both spouses and then sent to the tax office.

Don't worry, even if you haven't chosen the most favorable combination, you won't end up paying a cent more in taxes. This is because the final settlement is made in the tax return after the end of the year, and here the tax classes play no role in the amount of tax assessed.

If you choose an unfavorable tax class, you will pay too much income tax during the year and thus forego liquidity and possible interest. However, you can look forward to a tax refund the next year when you submit your tax return.

Sometimes it can even be advantageous for you to choose a tax class that is unfavorable from a tax point of view. This is because the tax class often influences the amount of wage replacement benefits.


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