German Steuerklasse, Explained: Which Class You're In and What It Costs

Your Steuerklasse (tax class) is one of the first things that lands on your German payslip, and one of the least understood. There are six of them, the Finanzamt assigns you one based on your life situation, and the wrong assumption about how they work costs couples real money — or rather, makes them think they're saving money when they aren't.

Here's the one thing to hold onto before anything else: your Steuerklasse sets your monthly withholding (Lohnsteuer), not your total tax. The Lohnsteuer deducted each month is a prepayment toward your annual income tax. Your actual tax bill is settled once a year at your tax return (Veranlagung). So choosing a "better" class doesn't lower what you owe over the year — it changes how much is taken from each paycheck along the way. That distinction is the whole game, and we'll show it in euros.

The six classes, in euros

The Finanzamt puts you in a class based on your situation:

• Steuerklasse I — single, divorced, or widowed (the default for most singles).
• Steuerklasse II — single parents (adds the Entlastungsbetrag relief).
• Steuerklasse III — for one spouse in a married couple, where the other takes V. The III spouse withholds the least.
• Steuerklasse IV — the default for married couples where both earn (each is taxed roughly as a single).
• Steuerklasse V — the partner of a III spouse. Withholds the most.
• Steuerklasse VI — a second job (no allowances; everything is withheld).

Here's what each class actually does to the same €50,000 salary — monthly take-home and the yearly Lohnsteuer withheld:

Two things to notice. First, I and IV are identical for a single income — IV is just the married-equal-earners default, taxed the same way as a single. Second, the spread is huge: the same €50,000 salary takes home the most in III and the least in V and VI — not because the tax differs, but because the withholding does. That's the point we'll unpack for couples next.

The married decision: III/V vs IV/IV

This is where the real money — and the real myth — lives. A married couple can choose between two combinations:

• III/V — the higher earner takes III (least withholding), the lower earner takes V (most withholding).
• IV/IV — both take IV (each taxed roughly as a single).

Take a couple earning €70,000 and €30,000. Here's each spouse's monthly take-home under each combination, and the household total:

Under III/V the household takes home about €161 a month more than under IV/IV. That looks like a win — and it is, for cashflow. But look closer at who gets what: III/V doesn't just give the household more, it shifts the money toward the high earner (more in III), while the low earner in V is squeezed hard. Under IV/IV the split is far more even.

And here's the myth-correction, the single most important sentence in this guide: that difference is not tax saved. It's tax withheld differently. The couple's total income tax for the year is identical under III/V and IV/IV — it's settled at the joint return regardless of class. III/V simply front-loads more cash into the high earner's monthly paycheck, which means the couple is under-withholding across the year and often faces a back-payment at the Veranlagung. IV/IV withholds closer to the true monthly share, so there's less to settle. Same total tax, different cashflow, different surprise at year-end.

Why Steuerklasse V feels brutal

The reason III/V is contentious is class V. Take the same €30,000 earner on their own:

On the same €30,000 salary, class V withholds about €278 a month more than class IV — the low earner's paycheck is noticeably thinner. That's by design: V assumes the partner is claiming the couple's shared allowances in III, so V withholds as if the earner has none of their own. For the household it can net out (the III spouse gains more than the V spouse loses, when the income gap is wide). But it lands entirely on the lower earner's payslip — which is exactly why it feels unfair, and why the system is changing.

IV/IV mit Faktor — the fairer middle

There's a third option that already exists today: IV/IV mit Faktor (the Faktorverfahren). Both spouses take IV, but the Finanzamt applies a factor that builds the Ehegattensplitting advantage into each paycheck proportionally — so each spouse's monthly withholding reflects the couple's actual joint situation, rather than the lopsided III/V split. It avoids both the V-spouse's harsh withholding and the year-end back-payment that III/V often triggers. The trade-off is that the monthly take-home is more evenly split and slightly lower for the high earner than under III/V — because it's closer to the truth from the start.

What's changing in 2030

If you've read that the German tax classes are "being abolished," here's the accurate, non-alarming version. Under current law, the III/V combination is being retired from 1 January 2030 — not before. Until then, III/V remains fully valid and choosable. From 2030, married couples currently on III/V will be moved to IV/IV mit Faktor, which becomes the standard for couples. Steuerklassen I, II, IV, and VI are unaffected; Ehegattensplitting itself is not abolished — only the III/V withholding combination is being replaced by the Faktorverfahren, which the government considers fairer and more transparent. In short: nothing changes for you before 2030, and when it does, it's a switch to a method that already exists and that spreads the withholding more evenly. No action is required now.

So which class should you pick?

For singles there's no choice — your situation sets your class (I, or II if you're a single parent). The decision only exists for married couples, and it's a cashflow decision, not a tax decision:

• III/V puts more cash in the high earner’s monthly paycheck, at the cost of a likely back-payment at the joint return and a thin paycheck for the lower earner. It suits couples with a wide income gap who want — and can manage — more monthly liquidity for the higher earner.
• IV/IV withholds more evenly and closer to the truth, so there are fewer year-end surprises. The sensible default when incomes are similar, or when you’d rather not owe a back-payment.
• IV/IV mit Faktor is the middle path — splitting’s benefit, spread fairly, with the fewest surprises — and the direction the whole system is moving in for 2030.

Whichever you pick, your total tax for the year is the same. You're choosing when you hold the money, not how much you ultimately pay.

netleft computes the real Lohnsteuer for every Steuerklasse — the same BMF-validated figures the German payslip uses. Put your salary in, flip between classes, and see exactly what each one does to your monthly take-home.