Let’s face it — tax isn’t the most exciting topic. But if you’re an international student working in Germany, understanding how the system works can help you avoid surprises and even save money.
Here’s a breakdown of the German tax classes (Steuerklassen) and what they mean for international students working in Germany.
What Are Tax Classes?
These classes are assigned by the local Finanzamt (tax office) once you register your address in Germany. Employers use your tax class to calculate how much tax you owe each month.
For example, most single, childless employees — including international students — are placed in Tax Class I by default.
Understanding the Classification System
If your situation changes — for example, you get married or have children — your tax class may be adjusted accordingly. For students working part-time or preparing for full-time employment after graduation, understanding which class applies to you is key to managing your finances effectively.
What Are the Tax Classes in Germany?
Here is a clear explanation of the six German tax classes (Steuerklassen) and what they mean for different personal situations:
Tax class I applies to most international students. It includes individuals who are single, divorced, widowed, permanently separated from their spouse, unmarried pensioners, or married persons whose spouse does not reside in Germany and therefore has limited tax liability. The current basic tax-free allowance (Grundfreibetrag) is €12,096 per year, meaning if your income stays below this threshold, you are not required to pay income tax.
Tax class II is for employed single parents who live alone with at least one child and receive child benefits (Kindergeld). It provides additional tax relief compared to tax class I, but individuals must meet specific requirements and apply for this classification.
Tax class III is designed for married couples or registered partners where one spouse earns significantly more than the other. In such cases, the higher-earning partner is assigned to tax class III, while the lower-earning partner is placed in tax class V. This combination allows the couple to optimise their joint tax burden.
Tax class IV is typically assigned to married couples who have similar levels of income. It ensures that both partners are taxed fairly and evenly, and many couples choose this class for balanced tax treatment.
Tax class V is the counterpart to tax class III and is assigned to the lower-earning spouse when their partner is classified under tax class III. Although it results in higher tax deductions for the lower earner, the overall household tax burden can be reduced when the income gap between spouses is significant.
Tax class VI is assigned to individuals who have more than one job. The second (or additional) employer does not apply the basic tax-free allowance (Grundfreibetrag) to the additional income, resulting in higher tax deductions on that salary. This class is often temporary and relevant for people working multiple part-time or freelance roles.
How Often do Tax Classes in Germany Change?
In Germany, employees are not permanently bound to their assigned tax class. Under certain conditions, they can switch to a different class to better align with their financial situation. Changing tax classes can benefit employees in various scenarios, such as a salary increase, job loss, or when aiming to optimise the overall tax burden within a household.
So, when can employees switch tax classes?
- Marriage: Newlyweds are initially assigned to tax class IV. However, they can switch to the III/V combination if one spouse earns significantly more than the other.
- Divorce: After a divorce, both partners must switch from class III/V or IV to tax class I. If one parent is living alone with a child and receiving child benefits, they may qualify for tax class II.
- Death of spouse: The surviving spouse remains in tax class III for the rest of the calendar year in which their partner passed away. In the following year, they are reassigned to tax class I or II (if they are a single parent).
- Change in income: Couples experiencing a significant change in income may choose to switch from class IV to III/V or vice versa in order to optimise their tax deductions based on the new income distribution.
- Unemployment or parental leave: If one partner stops working or has a considerable drop in income — for example, due to unemployment or parental leave — switching to the III/V combination may reduce the overall household tax burden.
Study in Germany Today!
Now that you’ve mastered the basics of the German tax system, it’s time to focus on your future and find a university that can help you reach your personal and professional goals.
The University of Europe for Applied Sciences (UE) offers a wide selection of state-recognised degree programmes and certificates across diverse industries — from business and sport to tech and software.
With campuses in Berlin, Potsdam, Hamburg and Iserlohn in Germany, as well as an international campus in Dubai, UE delivers high-quality, practice-oriented education to students from around the world.
Take the next step toward your personal and professional goals. Explore your options and find the right programme for you at UE today by finding your perfect programme here.