Do you know the difference between tax class 1 and 4? – Find out here

The German tax system is not exactly clear, but the difference between tax class 1 and 4 is quickly and easily explained.

Tax class 1 and 4: What’s the difference?

• Tax class 1 is suitable for single, separated, divorced or widowed people without children. Tax class 4, on the other hand, is intended for married couples with a similar income.

• There is not much difference between tax class 1 and 4. In terms of income tax, you are treated the same in both tax classes.

• Basic tax-free allowance, flat-rate income-related expenses, special expenses and pension lump sum are the same for both tax brackets. If you are in tax class 4 and have children, you can also use the child allowance

Tax class 4: Does that make sense?

• Tax classes 1 and 4 are not exactly among the most favorable tax classes. If you are married, you do not necessarily have to switch to tax class 4.

• In this tax class, the tax burden and allowances are divided equally between both spouses. This only makes sense if both spouses earn roughly the same amount.

• If one spouse already earns 10 percent more income, it may be worth switching to tax brackets 3 and 5. This reduces the combined tax burden.