Tax classes in Germany: Steuerklassen I–VI and changes through the Finanzamt

The tax class in Germany, or Steuerklasse, is primarily used to calculate the monthly withholding tax on wages (Lohnsteuer). It does not determine the final amount of tax for the year: the total tax liability is calculated through the annual tax return, if one is filed. However, the tax class determines how much money the employer withholds from your paycheck each month.

In 2026, the payroll tax withholding system will continue to use classes I, II, III, IV, V, and VI. Public discussions and tax reform proposals mention a future transition from the III/V combination to IV/IV with a factor, but this does not mean that classes III and V were abolished in 2025. Therefore, when selecting a class, it is important to rely not on outdated articles, but on the current regulations of the Finanzamt, ELSTER, and the Einkommensteuergesetz.

What Is a Tax Class?

Steuerklasse is an electronic identifier in the ELStAM (Elektronische Lohnsteuerabzugsmerkmale) system. The employer receives this information to calculate payroll and applies it when withholding taxes:

• income tax on wages (Lohnsteuer);
• church tax, if applicable;
• the solidarity levy, if applicable to a specific income;
• individual tax exemption (Freibetrag) or child tax exemption (Kinderfreibetrag), if they are entered in ELStAM.

The most common mistake is to view the tax class as a way to “pay less tax forever.” In practice, it changes the distribution of withholdings throughout the year. If a family or employee ends up with an overpayment after filing their return, the tax authority refunds the difference; if too little was withheld, an additional payment may be due.

Tax Classes I–VI

Class	Who it’s typically suitable for	What’s important to understand
Tax Class I	Single, divorced, permanently separated, and widowed after the grace period	The standard class for an employee without a spouse in a joint tax filing
Tax Class II	Single parents, provided the conditions for the Entlastungsbetrag are met	Provides additional relief for single parents; conditions must be checked based on the specific family situation
Tax Class III	Spouse or registered partner with higher income in the III/V combination	Usually results in lower withholdings for one partner, but the other partner falls into Class V; often leads to a mandatory tax return
Tax Class IV	Spouses or registered partners with comparable incomes	The standard option for a couple where both partners work
Tax Class IV with a Factor	Couples with different incomes who want a more accurate distribution of withholdings	The tax office calculates a factor so that the withholdings better match the couple’s expected annual tax liability
Tax Class V	Second partner in a III/V combination	Withholdings are higher because the main tax benefits are applied to the partner in Class III
Tax Class VI	Second and subsequent jobs, if not the primary place of employment	The strictest class for withholdings: standard allowances are usually already accounted for at the primary job

Which tax class do spouses choose?

For spouses and registered partners, there are usually three practical options:

1. IV/IV—a simple option if both earn roughly the same amount.
2. III/V — an option for couples with a significant income disparity, but with the risk of having to pay additional taxes after filing the return.
3. IV/IV mit Faktor — a more accurate option in which the Finanzamt takes into account the expected income of both partners.

The III/V combination may seem advantageous in terms of monthly pay because the partner in tax class III has lower withholdings. But this isn’t a gift from the tax authorities: when calculating Einkommensteuer annually, the couple’s income is still combined. If too little was withheld, an additional payment may be due after filing the return.

IV/IV with a factor is often more convenient for couples where both partners work but have different incomes. This option helps distribute withholdings more evenly and reduces the risk of an unpleasant surprise after filing the tax return.

What about the elimination of tax classes III and V?

The statement “Classes III and V will be abolished in 2025” is incorrect. In 2026, these classes are still in use in the Lohnsteuer system. However, the reform does indeed discuss phasing out the III/V combination and transitioning to IV/IV with a factor as the standard model for couples.

The practical takeaway is simple: if you’re already using Class III/V or are thinking of switching to this combination, check the current rules before submitting your application. For long-term family planning, it’s best to compare not only your monthly net salary but also the expected total tax liability on your tax return.

When a tax class is assigned automatically

Usually, an employee does not need to “obtain” a tax class separately. The data is stored in ELStAM, and the employer retrieves it electronically. When starting a new job, you typically need:

• Tax identification number;
• date of birth;
• information on whether the job is a primary or secondary job;
• if necessary - information about the Freibetrag or restrictions on the employer’s access to ELStAM.

Some changes are automatically reflected in the system via the Melderegister, such as marriage or divorce. However, if your life circumstances require a different tax class or an additional tax-free allowance (Freibetrag), you’ll often need to file a claim with the Finanzamt.

How to Change Your Tax Class

A change in tax class is usually made through the Finanzamt or online via ELSTER. For spouses and registered partners, a form to change the tax class or apply the factor method is used.

Before submitting your application, there are three steps you should take:

1. Compare the expected annual incomes of both partners.
2. Check whether the selected combination will require you to file a tax return.
3. Calculate the approximate annual tax liability, not just the monthly net pay.

If the situation is straightforward—for example, one partner starts a new job—a standard form update is often sufficient. If you’re self-employed, receiving Elterngeld or Kurzarbeitergeld, have multiple employers, earn income from abroad, or have significant tax-free allowances (Freibeträge), it’s best to verify the results with the tax office (Finanzamt) or a tax advisor.

Common Mistakes

• Base your calculations solely on your monthly salary. A higher net amount now could result in an additional payment after you file your tax return.
• Do not apply Steuerklasse VI to a second job. If the employer has registered the job as a secondary job, the withholdings will be significantly higher.
• Confusing the Kinderfreibetrag and Kindergeld. These mechanisms are related to children, but they do not function as a simple monthly salary supplement.
• Don’t expect automatic optimization. The Finanzamt does not select the best tax class for a family every month; taxpayers must file the application themselves.
• Relying on old Freibetrag amounts. The Grundfreibetrag, Entlastungsbetrag, and other parameters may change from year to year.

Brief Conclusion

In Germany, the tax class is a tool for calculating payroll deductions, not the final tax regime. Single employees are most often assigned to Steuerklasse I, single parents to II, married couples choose between IV/IV, III/V, and IV/IV with a factor, and class VI applies to side jobs. In cases of uncertainty, it is safer to calculate the annual total and check the current Finanzamt/ELSTER forms before changing your tax class.