What is the difference between tax classes 1, 3, 4 and 5?

German tax classes (Steuerklassen) determine how monthly income tax is withheld from your salary. They don't change your total annual tax — only how that tax is spread across the year. The annual Einkommensteuer itself is the same regardless of which class you pick.

Class 1 applies to singles, divorced people and most non-married employees. For married couples, the options open up:

Class 3/5 is the asymmetric setup. The higher earner takes class 3 with very low withholding; the lower earner takes class 5 with high withholding. The household's annual tax bill is roughly the same as 4/4, but the monthly cash flow shifts firmly toward the higher earner. This works well when one partner earns substantially more than the other.

Class 4/4 applies the same withholding rules as class 1 to both partners — sensible when both incomes are similar.

Class 4 with factor (Faktorverfahren) keeps both partners at class 4 but applies a calculated factor to even out monthly net pay between them. The year-end true-up at the tax return is small, and both partners have a more accurate withholding through the year.

Choosing well is mostly about monthly cash flow — but it also has real consequences for benefits like Elterngeld, which is calculated on the net pay of the months before parental leave. So a class change planned several months ahead of birth can directly increase the Elterngeld amount.

The Finanzamt's default after marriage is rarely the optimal choice for a given couple. It is worth a quick review.