German tax classes and your first year: how Steuerklassen work, how to get your tax ID, and what to check on your first payslip

First, the tax ID

Everyone who registers a German address receives a tax identification number (Steuer-Identifikationsnummer, „Steuer-ID“) – eleven digits, valid for life, issued by the Federal Central Tax Office and sent by post to your registered address two to four weeks after you register at the local residents’ office (Anmeldung). Your employer needs it to retrieve your tax class electronically. Until it arrives, the employer must withhold at class VI – the highest rate, with no allowances. The excess is refunded through payroll once the ID is on file, or through your return, but it makes for a lean first month or two. Register your address as early as possible after arrival.

The tax ID is different from the tax number (Steuernummer), which the tax office assigns when you first file a return or register a business. You will eventually have both.

The six tax classes

Two points matter more than any other. First, the tax class only affects monthly withholding, not the tax you owe for the year. A couple in III/V, IV/IV or IV with factor ends up with the same annual tax after filing. Second, classes III and V are not being abolished: the plan to replace them with the factor method from 2030 was removed from the legislation in December 2024 and has not returned. Anything you read to the contrary is out of date.

Which combination for married couples?

III/V gives the couple the most cash during the year when one spouse earns considerably more than the other – as a rule of thumb, 60/40 or more unequal. The price is a mandatory return and, frequently, a back payment in the following year, because the combined monthly withholding is too low. IV/IV suits couples with similar incomes and produces neither large refunds nor large bills. IV with factor is the compromise: the tax office calculates a factor from both expected salaries so that the monthly withholding approximates the joint annual tax. It also requires a return, but rarely a surprise.

If your spouse does not live in Germany, the options narrow. A spouse resident in another EU or EEA country can be included on application if the couple’s income is largely taxable in Germany (§ 1a EStG), opening classes III/IV/V. A spouse resident outside the EU/EEA – in the US, the UK, India, Australia – cannot; you remain in class I, and joint filing is not available.

Changing your tax class

After marriage the tax office automatically assigns IV/IV. Any other combination requires an application – on paper or through the ELSTER portal – signed by both spouses. The change takes effect from the following month. Since 2020 you may change class more than once a year, which is useful when circumstances shift: a job loss, parental leave, a move abroad. Employees whose spouse dies are placed in class III for the year of death and the following year. After separation, class I or II applies from the following calendar year.

Other first-year decisions

Church tax

When you register your address you are asked for your religion. If you state one that levies church tax – Catholic, Protestant, some others – 9 % of your income tax (in Hessen) is withheld for the church, in addition to your tax. It is deductible but not refundable. If you did not intend to be a church member in Germany, leave the field blank; leaving later requires a formal Kirchenaustritt at the district court, with a fee.

Social security

Roughly 21 % of gross salary goes to pension, health, long-term care and unemployment insurance, with the employer paying a similar share. Above an annual salary threshold you may opt for private health insurance – a decision with long-term consequences that has nothing to do with tax but arrives at the same time. Postings under a social security agreement (US, UK, Switzerland and others) may keep you in your home system for a limited period; the employer should have the certificate.

Tax allowances on the wage tax card

If you have high recurring work-related costs – a double household, long commute, professional training – you can register an allowance (Freibetrag) with the tax office so that withholding is reduced during the year rather than refunded after it. The application is renewed every two years and triggers a filing obligation.

Arrival-year income

Salary earned in your home country before the move is not taxed in Germany but must be declared in your first German return; it raises the tax rate applied to your German income for that year. Keep your foreign payslips for the months before arrival – you will need them.

How tes tax helps in year one

Steuerberater Florian Enders and the tes tax team review your first payslip, apply for the right tax class and any allowances, register you where needed, and prepare the arrival-year return with the foreign-income positions that determine whether you receive a refund or a bill. Fully remote, in English, with a written fee quote before engagement.

Note: This page provides general information on German tax law. A binding assessment of your situation is only possible after engagement and review of your documents. We quote our fees in the initial consultation, before you commit.