ELStAM, general information on tax classes and combinations

1. There are the following tax classes:
  • Tax class I applies to single and divorced employees as well as married employees whose spouse lives abroad or who are permanently separated from their spouse. Widowed employees also belong to tax class I, with an exception for the year of the death of the spouse and the following year (see tax class III).
  • Tax class II applies to the employees named in tax class I if they are entitled to the relief amount for single parents. The prerequisite for the granting of the relief amount is that the employee is a single parent and has at least one child in his household for whom he is entitled to an exemption for children or child benefit and who is registered with him as his main or secondary residence. If the child is registered with more than one person, the relief amount is due to the single parent who receives the child benefit. If the employee lives in a marriage-like partnership or in a registered civil partnership, the relief amount cannot be granted. The same applies if the single parent shares a household with another adult for whom he or she is not entitled to an exemption for children or child benefit.
  • Tax class III applies to married employees if both spouses live in Germany, do not live permanently apart and the employee's spouse does not receive wages or wages and is classified in tax class V. The tax class combination III / V must be applied for by the spouses together. The change from tax class III or V to tax class IV is only possible at the request of one spouse, with the result that both spouses are classified in tax class IV. Widowed employees are classified in tax class III in the year of the death of the spouse and in the following year if both lived in Germany on the day of death and did not live permanently apart.
  • Tax class IV applies to married employees who live in Germany and do not live permanently apart. This also applies if one of the spouses does not receive any wages.
  • Tax class V takes the place of tax class IV for one of the spouses if the other spouse is classified in tax class III.
  • Tax class VI applies to employees who receive wages from several employers at the same time, namely for the withholding of wage tax from the second and further employment relationships.

2. Tax class combinations / choice and wage tax deduction for spouses:
If both spouses receive wages, they are generally taxed together because it is usually cheaper. When an employee is deducting income tax, however, only their own wages can be used as a basis. The wages of both spouses can only be combined after the end of the year. Only then does the applicable annual tax arise. In order to come as close as possible to the annual result, the spouses can choose from the following tax class combinations:

  • The tax bracket combination IV / IV assumes that the spouses earn the same amount.
  • The tax class combination III / V is designed in such a way that the sum of the tax deductions for both spouses roughly corresponds to the joint annual tax if the spouse classified in tax class III achieves 60% and the spouse classified in tax class V 40% of the joint earned income. As a result, the tax deduction for tax class V is relatively higher than for tax classes III and IV. If the ratio of actual wages does not correspond to the legal assumption of 60:40, then additional tax payments may be made. For this reason, there is an obligation to submit an income tax return with the tax class combination III / V.
  • Instead of the tax class combinations III / V, employees can choose the so-called factor method for tax class IV / IV. The factor is a tax-reducing multiplier so that no more income tax is withheld from spouses with tax class IV than is absolutely necessary. Here, too, you need to submit a tax return.

If one of the spouses only earns income other than wages (e.g. from a business), the tax class is irrelevant for him. The other spouse can therefore opt for tax class III (or a less favorable tax class), for example. The two incomes are then added together in the joint assessment and finally taxed (taking into account the wage tax already paid).

The above statements apply accordingly to partners in a registered civil partnership.

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Hints

  • Hamburg citizens can contact any regional tax office in Hamburg for ELStAM matters.
  • The registration offices are responsible for changing the civil status data in the register (e.g. marriage, birth).

Related Links

  • Leaflet on tax class selection 2022

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