Germany: tax classes, 3/5, 4/4 or the factor method?

What the tax class determines

The tax class tells your employer how much wage tax to deduct from your salary each month. It is an advance payment on your income tax: the final tax is only set in the tax assessment notice after the tax return, and then too much or too little is evened out.

The tax class therefore does not change how much tax you have to pay in a year, only when you pay how much of it. Social contributions do not depend on it, only on the salary.

The six classes

The law knows six wage tax classes (§ 38b EStG):

• Class 1: single employees, also divorced and widowed, as far as they do not belong in classes 2, 3 or 4.
• Class 2: like class 1, but with the relief amount for single parents (§ 24b EStG).
• Classes 3 and 5: married people, if both partners apply. One gets the 3 with low wage tax, the other the 5 with high.
• Class 4: married people who are both taxed the same; it applies as long as no other combination has been applied for.
• Class 6: the second and every further employment, if you work for several employers at the same time.

Couples: 4/4, 3/5 or factor

Under 4/4 both partners are taxed like single people. If they earn different amounts, more wage tax is usually deducted than later appears in the tax assessment notice: the difference comes back as a refund.

Under 3/5 the higher earner gets class 3, the other class 5. In class 3 little wage tax is deducted, in class 5 a lot; together there is often more net a month than under 4/4. In return the tax return is mandatory (§ 46 para. 2 no. 3a EStG), and there may be a back payment, because the deduction need not match the final tax exactly.

Under the factor method both stay in class 4, but the wage tax is multiplied by a factor below 1. The tax office calculates it from the expected income tax under the splitting method divided by the sum of the wage tax in class 4 (§ 39f EStG). That way the deduction fits the final tax better; here too the tax return is mandatory.

The example: €4,000 and €2,000 gross

Two partners, aged 35, no children, no church tax, in statutory insurance, additional contribution 2.9%, 2026 figures. Partner A earns €4,000 gross a month, partner B €2,000.

Under 4/4, A keeps €2,605.50 and B €1,476.84, together €4,082.34 net. Under 3/5 with A in class 3 it is €2,928.17 and €1,267.00, together €4,195.17: €112.83 more a month. If instead B has class 3 and A class 5, only €2,185.09 and €1,565.00 remain, together €3,750.09.

Social contributions are the same in all cases (€870.00 for A and €435.00 for B). Only the wage tax shifts: together €612.66 under 4/4, €499.83 under 3/5 and €944.91 in the unfavorable split.

When the choice matters more

The tax class determines the net, and some benefits are based on the net. For unemployment benefit, the tax class at the start of the year in which the entitlement arises counts; a later change between spouses is taken into account only if the new classes match the ratio of the salaries or the unemployment benefit becomes lower as a result (§ 153 SGB III). For Elterngeld, the tax class goes into the deduction for income tax (§ 2e BEEG).

Whoever expects one of these benefits should know the rules and deadlines before changing the tax class. A change shortly before the entitlement can have a different effect than expected.

How to change the combination

1. Run the combinations through the gross-to-net calculator: once per partner, in class 4, 3 and 5.
2. Apply for the new combination at the tax office, most easily in Mein ELSTER. For 3/5 both partners must agree; back to class 4 is possible on the application of just one partner (§ 38b para. 3 EStG).
3. The employer deducts the new class as soon as it is in the electronic wage tax features.
4. Plan for the tax return: with 3/5 and the factor method it is mandatory.