When do you have to pay taxes?
Every employed person, but also pensioners, only has to pay taxes when they exceed certain income limits. However, income remains tax-free up to a certain income limit. But when does tax liability begin and what taxes do you have to pay then?
The basic allowance to secure your existence
The basic tax allowance is a tax allowance that is intended to ensure the subsistence level for all employed people. This is a set income limit up to which no taxes are due on income. This annual tax-free income amount is adjusted upwards from year to year. Married couples who are assessed jointly are allowed to claim twice the basic allowance.
The basic allowance for singles this year is €10,908 and for married couples it is €21,816. For the coming year 2024 it will be increased to €11,604 for singles and to €23,208 for married couples. Employed people pay taxes on their income up to these amounts. In principle, everyone can take advantage of the basic allowance, including employees, self-employed people, trainees and pensioners.
In addition to wages from non-self-employed work, income also includes profits from the self-employed and other income, such as Capital gains, Interest charges from stock transactions or rental income. All of this income is cumulated for the basic allowance.
Taxes are then due for every euro that is above the basic allowance. This can then be a wage tax or income tax, but other taxes also apply to the excess amounts. The church tax and the solidarity contribution may come into question here.
Any taxable individual (e.g. b. Freelancer) and legal entity (corporations...
How much tax do you have to pay?
Depending on the amount of your own income and the individual tax class, the amount of taxes also varies. In the current year 2023, no tax is due up to an income of €10,908. Between €10,909 and €62,809, the tax rate increases from 14 percent to 42 percent. After that, it remains at 42 percent up to a taxable income of €277,826. The so-called rich tax rate of 45 percent only applies to incomes above that.
In Germany there is a so-called basic allowance for which no taxes are due on income. Taxes only become due when the basic amount is exceeded. The amount of taxes is always based on the level of income and personal tax bracket.
