The tax authorities have updated the information sheet on tax class selection for spouses and civil partners for 2022. The sheet reflects the adopted Tax Relief Act 2022 (Steuerentlastungsgesetz 2022), including the increase in the employee lump-sum allowance to EUR 1,200.
As is well known, spouses and civil partners who are subject to unlimited income tax liability in Germany and who are not permanently living apart may choose their tax class for wage tax withholding. The available options are tax classes IV/IV for both spouses or civil partners, or one partner choosing tax class III (the higher earner) and the other choosing tax class V. However, selecting tax classes III/V may well result in a back tax payment, as the higher earner's wages are taxed at too low a rate. The III/V tax class combination is fundamentally designed so that the spouse or civil partner classified in tax class III earns approximately 60 percent of the combined wages, while the partner in tax class V earns approximately 40 percent. Where there are significant deviations from this prescribed ratio, a back tax payment is likely upon filing the income tax return, as described above. For this reason, choosing tax classes III/V also entails a mandatory obligation to file an income tax return. To avoid a back tax payment, the two spouses or civil partners may also opt for tax classes IV/IV. It must be noted, however, that the more favourable taxation of tax class III is then forfeited.
Filing the application
An application to change tax class may be submitted by taxpayers multiple times within a calendar year. The deadline for a change is 30 November of the relevant calendar year. The competent authority is the tax office at which the spouses or civil partners have registered their place of residence (Wohnsitzfinanzamt). An application to change tax class may also be filed electronically via the "Mein Elster" portal.
Tax class selection
To assist spouses and civil partners in selecting their tax class, the Federal Ministry of Finance (BMF) and the supreme tax authorities of the federal states have prepared the table below. From these tables, spouses or civil partners can identify the tax class resulting in the lowest tax burden for a given monthly wage. Two tables are provided for differentiation. The first table applies where the higher-earning spouse or civil partner is insured in all branches of social security. The second table applies where the higher-earning spouse or civil partner is not insured in any branch of social security (e.g. privately insured civil servants). It should also be noted that the tables are only applicable where the annual wage is constant. Tables one and two illustrate the income ratio under tax class III/V. Columns 1 and 4 show the monthly wage A of the higher earner. Columns 2, 3, 5 and 6 show the monthly wage B of the lower-earning spouse or civil partner. Columns 2 and 5 apply where the lower-earning spouse or civil partner is insured in all branches of social security, while columns 3 and 6 apply where the lower-earning spouse or civil partner is not insured in any branch of social security. Finally, it is important to note that where the monthly wage of the lower-earning spouse or civil partner exceeds the amount shown in columns 2, 3, 5 and 6, tax classes IV/IV will generally result in a lower or at least not higher tax burden for the spouses or civil partners than tax classes III/V.
Frequently asked questions
Frequently asked questions
Which tax class combinations can spouses or registered partners choose?
Spouses and registered partners with unlimited tax liability who are not permanently separated can choose between the combinations IV/IV and III/V for wage tax withholding. Under III/V, the higher earner receives tax class III and the lower earner tax class V. Alternatively, the factor method (IV/IV with factor) is available upon application.
When does tax class combination III/V lead to a back payment?
The III/V combination is designed for cases where the partner in tax class III earns about 60% and the partner in tax class V about 40% of the joint employment income. If the actual income ratio deviates significantly from this, the higher earner's wages are taxed too leniently during the year, which typically results in a back payment upon filing the income tax return. For this reason, couples using III/V are required to file an annual income tax return.
By when and where can a change of tax class be requested?
An application to change your tax class can be filed multiple times per calendar year with your local residence tax office (Wohnsitzfinanzamt). The deadline is November 30 of the respective calendar year. The application can also be submitted electronically via the "Mein Elster" portal.
When is the tax-class combination IV/IV more favorable than III/V?
If the monthly wage of the lower-earning spouse exceeds the threshold amounts shown in the BMF tables (columns 2, 3, 5 or 6), the IV/IV combination generally results in a lower – or at least no higher – wage tax burden than III/V. The tables differentiate according to whether each spouse is covered by all or none of the branches of social insurance, and they apply only if the annual wage remains constant.
How does the 2022 Tax Relief Act (Steuerentlastungsgesetz 2022) affect the choice of tax class?
Among other measures, the Steuerentlastungsgesetz 2022 raised the employee lump-sum allowance (Arbeitnehmer-Pauschbetrag) to €1,200. This change has been incorporated into the updated 2022 guidance on choosing a tax class and into the BMF comparison tables, so that the most favorable tax class combinations now reflect the new allowances.