The assignment to an income tax class determines the amount of net salary an employee receives. It specifies which income tax is withheld from the gross salary by the employer and remitted to the tax office. The assignment to a specific tax class is intended to make it easier for the employer to take into account the income and tax-free allowances dependent on the personal life situation as well as the applicable flat rates in the income tax advance payment. Which tax class to choose after marriage is explained in this article.
What income tax classes are there?
To be assigned to a class, the person must be subject to unlimited income tax liability. This applies to all natural persons with residence or habitual abode in Germany. There are six income tax classes into which a person is classified depending on their life situation.
Income tax class 1 is for single persons. The reason why they are single is irrelevant. Persons can therefore be unmarried, widowed, separated or divorced. Single parents are classified in tax class 2. Income tax class 3 applies to married couples where one partner has lower income. Tax class 4 includes couples after marriage with approximately equal income, whereas tax class 5 is intended for those who are married but have significantly lower income than their partner. Those who have additional income or a second job (usually alongside a main employment) are often assigned to tax class 6. A right to choose the tax class assignment generally only exists for married couples – and only between tax classes 3/5 or 4/4 (possibly with factor).
Engagement rings in all shapes
Which tax class is most advantageous after marriage?
When couples exchange wedding rings at their wedding, they also need to decide which tax class to choose after marriage to get a tax advantage. The decision depends largely on whether both spouses have income and how large the income difference is. Generally, couples where both partners work are classified in tax class 4 after marriage. This also applies to single parents who were previously in tax class 2.
If the spouses' incomes differ by a maximum of 10%, the tax advantage is usually greatest if both remain in tax class 4. If the income difference is greater than 10%, the spouses have the option to actively decide against assignment to class 4. A tax class change makes particular sense if one partner earns significantly more than the other. In this case, switching to class 3 for the higher earner and class 5 for the lower earner can be advantageous. With this choice, the higher earner pays significantly less income tax than the lower earner – in the end, the household often has more net income available. If only one spouse works, they are often assigned to class 3.
If one partner loses their job, they retain their original tax class. This can result in financial disadvantages if a higher earner becomes unemployed and the couple was previously classified in classes 3 and 5. In all other cases, a change can usually be made once per year. If the spouses earn the same or similar amounts, a change is often not worthwhile. Through spousal splitting, couples often receive a refund from the tax office after filing their tax return.
Spousal splitting – maximize your savings
Spousal splitting is available to couples after marriage. The tax burden is determined by adding up the couple's income – the couple is therefore jointly assessed. Tax is calculated only on half of this calculated (and rounded down) sum. This tax amount is then doubled to give the income tax to be paid. Splitting provides financial benefits especially when partners have very different incomes – often in combination with tax classes 3 and 5. The tax office calculates the income tax as if the spouses earned the same income.
Where and how to change your tax class after marriage?
Changing your tax class after marriage is easier than ever today. Through the "Electronic Wage Tax Deduction Features" (ELStAM) procedure, the income tax class and identification number of the newly married couple are automatically transmitted to the tax office after marriage. The employer can then retrieve this data. To change tax classes, the form "Application for Tax Class Change for Spouses/Life Partners" must be completed, signed by both spouses, and submitted to the responsible tax office. The application is free of charge. The tax class change generally becomes effective from the following month after the application is submitted. The deadline for a change within a calendar year usually ends on November 30. A retroactive change is not possible. Therefore, it is advantageous if couples inform themselves before the wedding about which tax class combination they would like to choose.
Generally, only one change per year is possible. Only in special exceptional cases – such as unemployment, new employment, permanent separation, or the death of a partner – may another change be possible.
Take advantage of tax benefits
If it is foreseeable that a spouse will receive unemployment benefits or parental allowance in the near future, it may be worthwhile to change the tax class. These wage replacement benefits are calculated based on the net income an employee previously earned. Those who therefore change to class 3 in time often have significantly higher benefits available. To take full advantage, the income tax class often must be valid for at least seven months before benefits begin. In general: those who inform themselves, plan ahead, and are not afraid of a change can save real money with the right assignment to income tax classes.
