German social security payment, tax threshold, tax rate

Germany's tax system is very complicated. Today, I only talk about the personal income tax and social security contributions of people working in the company.

Personal income tax is mainly collected in the form of "monthly prepayment, year-end accounting, overpayment and underpayment". In other words, office workers pay monthly income tax in advance according to their own tax bands, and then calculate according to the annual income and the real corresponding tax rate at the end of the year. Finally, retreat more and make up less.

If you want to know how much tax and social security you have to pay a year, you need to start with the basic composition of individual tax.

I. Tax allowances

Since June 65438+1 October1in 2022, the income tax exemption has increased from the previous 9984 euros to 10347 euros (annual income), an increase of 363 euros.

Second, the proportion of social security

Proportion of social security contributions in Germany in 2022

Thirdly, the salary tax band.

There are currently 6 tax classes in Germany, mainly depending on marital status, as shown in the following table.

Six tax bands in Germany in 2022

This tax band in Germany is different from our graded tax rate table. It only clarifies the income tax that must be paid every month, and the actual tax rate and tax payable are finally calculated on an annual basis. For example,

A single person earning 4,200 euros a month has a net income of 2,656 euros after tax.

Single person with monthly income 10000 euros, net income after tax is 5683 euros.

This is just paying taxes in advance. How much tax will be paid in the end, and what is the final net income? We won't know until the year-end accounting, but the net income will probably be within this range. Let's give an example at last.

In my opinion, one of the functions of the six tax bands in Germany is to tell taxpayers that it is possible to pay less taxes legally if you are married or have children. The government encourages people to get married and have children. And if you have two jobs, you have to pay more taxes. Don't hide it, or you will be at your own risk.

Fourth, year-end accounting.

At the end of the year, the tax payable shall be calculated as follows.

Calculation of annual tax payable

Then use the annual tax payable to find the corresponding position on the abscissa below, get the annual income tax rate, and calculate the personal income tax. The solid black line in the figure is a graph of the tax rate calculation formula.

As can be seen from the figure, within the tax allowance (10347 Euro), there is 0 tax.

German tax rate curve in 2022

5. Finally, give examples to illustrate the tax payment of people with different marital status.

Single with children.

Annual income tax of around 60,000 yuan