The difference between tax classes 1 and 3 simply explained
German income tax legislation provides for the payment of wage tax for employees. The amount of the wage tax is based on the wage tax class entered on the wage tax card. It makes a difference, for example, whether you are in tax class 1 or 3.
If you earn income as a self-employed person or freelancer in Germany, you have to file an income tax return once a year. As an employee with income tax class 3, you are not only married, but also required to file a tax return. As a holder of tax class 1, you may decide voluntarily.
What is the difference between tax class 1 and 3?
The choice of tax class has a direct impact on the amount of wage tax, plus the solidarity surcharge and possibly church tax. The wage tax can be determined in a special wage tax table. In addition to the voluntary submission of a tax return and a submission obligation, there are other important differences between tax class 1 and 3.
- Anyone who is employed and insured can enter tax class 1 on the income tax card under certain conditions. The entry entitles the holder to deduct the basic allowance, employee lump sum, pension lump sum and special expenses lump sum.
- Employees who are single or married to a spouse living abroad can receive the tax bracket. In the case of employees who are permanently separated, married persons, such as divorced or widowed persons, also receive tax class 1.
For married people there is a choice in the income tax bracket
- In contrast to income tax class 1, tax class 3 generally applies to married employees. The other married spouse then receives no wages or is assigned to tax class 5.
- For tax class 3, both spouses must have a joint residence in Germany. Child allowances are entered on the income tax card.
- There is a difference with regard to the tax exemptions. Tax class 1 holders have a basic allowance of 8,004 euros. If you enter tax class 3, the basic allowance doubles.
If you are single (single or divorced), you hardly have a choice in the tax class ...
You can change from tax class 1 to 3 after a civil marriage. As a married person, you can switch from tax class 4 to tax class 3 or back once a year.
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