Understanding how salaries work in Germany is essential before signing any contract. Many international students and graduates are surprised that the net salary they receive is significantly lower than the gross salary stated in the offer. This page explains how German salaries are structured, which deductions apply, and what determines your final take-home pay.
Gross (Brutto) vs Net (Netto)
• Gross salary (Brutto):
The amount stated in your contract before any deductions.
• Net salary (Netto):
The amount that actually arrives in your bank account after taxes and social contributions.
In Germany, employers always negotiate and advertise gross salaries, not net.
Main Deductions from Your Salary
Income Tax (Lohnsteuer)
• Progressive tax system
• Higher income → higher tax rate
• Automatically withheld by the employer
The exact amount depends on:
• Your income level
• Your tax class (Steuerklasse)
Social Security Contributions (Sozialabgaben)
These are usually split between employer and employee.
Typical contributions include:
• Health insurance (Krankenversicherung)
• Pension insurance (Rentenversicherung)
• Unemployment insurance (Arbeitslosenversicherung)
• Nursing care insurance (Pflegeversicherung)
Together, these make up a significant portion of deductions.ortal.
Solidarity Surcharge (Solidaritätszuschlag)
• Mostly abolished for low and middle incomes
• Still applies in some higher-income cases
Many employees no longer pay it, but it can still appear on payslips.
Church Tax (Kirchensteuer) — If Applicable
• Only applies if you are officially registered as a church member
• Around 8–9% of income tax, not of your salary
• Can be avoided if you are not registered
Tax Classes (Steuerklassen) — Why They Matter
Tax class affects monthly net salary, not total annual tax.
Common cases:
• Tax Class I: single, unmarried employees (most students & graduates)
• Tax Class IV / III: married couples
• Tax Class VI: second job (important for students with multiple jobs)
Wrong tax class → lower monthly net, even if annual tax is correct later.
How Your Net Salary Is Calculated
Your employer:
1. Starts with gross salary
2. Subtracts:
• Income tax
• Social security contributions
• Other applicable charges
3. Transfers the net amount to your bank account
You do not calculate or transfer taxes yourself as an employee.
Typical Net-to-Gross Ratio
As a general rule of thumb:
• Low to mid income: ~60–70% of gross
• Higher income: ~55–60% of gross
These are estimates only. Exact results depend on:
• Tax class
• Insurance type
• Federal state
• Personal situation
Special Case: Students & Werkstudents
(Image keywords: werkstudent payslip germany)
Students often have different deductions:
Mini-jobs
• Very low or no taxes
• No regular social security contributions
Werkstudent positions
• Pension contributions apply
• No unemployment or health insurance via payroll
• Usually higher net compared to regular part-time jobs
Understanding this difference can significantly affect take-home pay.
Payslip (Gehaltsabrechnung): What to Check
Every month, you receive a payslip showing:
• Gross salary
• All deductions (itemized)
• Net salary
• Employer contributions (informational)
Always check:
• Tax class
• Insurance status
• Number of worked hours (if hourly)
Mistakes happen—and corrections are easier early.
Common Mistakes & Misunderstandings
“The salary is lower than promised”
Usually caused by:
• Confusing gross with net
• Not accounting for taxes and insurance
“I pay too much tax”
Often related to:
• Wrong tax class
• Second job taxed under Class VI
• Missing annual tax return
“My friend earns more net with the same gross”
Net salaries vary due to:
• Different insurance
• Different tax class
• Different family status
Reality Check
Reality Check
• Gross salary is only a starting point
• Net income depends on personal factors, not just the job
• Germany trades higher deductions for:
• Healthcare coverage
• Social security
• Long-term stability
Before accepting any offer, always ask yourself:
Is this gross salary sufficient after deductions?