What is Steuerklasse?
The Steuerklasse (tax class) is one of six categories (I to VI) for employees that determines which Lohnsteuer table the employer uses to calculate Lohnsteuer. It appears on the payslip, usually in the header area with the tax details, often abbreviated as StKl or St.-Kl., together with the tax identification number and, where applicable, child allowances and the church tax feature. The annual tax certificate (Lohnsteuerbescheinigung) at year end also shows it. The employer retrieves these details electronically as ELStAM (electronic wage tax deduction features) from the tax administration. The employer does not enter them itself and may not change them.
The tax class only governs the amount of the monthly Lohnsteuer deduction. The final income tax is only determined by the tax return for the year, which settles any Lohnsteuer withheld in excess or in shortfall. The tax class therefore does not change how much tax someone ultimately pays, but when the money is withheld.
The six classes at a glance: Steuerklasse I applies to employees who are single, divorced, widowed or permanently separated. Class II applies to single parents who receive the relief amount for single parents (Entlastungsbetrag für Alleinerziehende). Class III applies to married employees whose spouse is in class V or has no income. Class IV applies to both spouses when they earn similar amounts and can be combined with the factor method (Faktorverfahren). Class V is the counterpart to III. Class VI applies to every second and further employment, because no allowances are taken into account there.
Married couples choose their combination at the tax office and can generally change it once a year, and more often on certain events such as marriage or unemployment. The III/V combination raises the net pay of the higher earner during the year and lowers that of the partner, and it usually means a tax return has to be filed. The tax class also affects wage replacement benefits such as unemployment benefit I (Arbeitslosengeld I), sick pay (Krankengeld) or parental allowance (Elterngeld), because these are calculated from net pay.
For employers: the tax class is not agreed in the employment contract and is not freely chosen. If the class changes at the tax office, the new feature arrives through the ELStAM query, and payroll must run with the new class from the month stated in the feature. If the feature is missing, payroll is provisionally run under Steuerklasse VI.
In practice
An employee starts a new job and gives the employer her tax identification number and date of birth. HR registers her for the electronic query, retrieves the ELStAM and receives Steuerklasse I. On the first payslip the class appears in the header area, and Lohnsteuer is calculated using the table for class I. A year later she marries, and the couple applies to the tax office for the IV/IV combination. Once the employer retrieves the changed feature, payroll is calculated with class IV from the reported month, and Lohnsteuer falls or rises depending on the partner's income. If she has a second job on the side, it is automatically processed under Steuerklasse VI.
Frequently asked questions
Where is the Steuerklasse on the payslip?
It is usually in the header area of the payslip with the tax details, often abbreviated as StKl or St.-Kl. The annual tax certificate also shows it.
What does the Steuerklasse mean?
The tax class determines which Lohnsteuer table the employer uses to calculate Lohnsteuer. It affects the monthly amount of the deduction, not the final annual tax.
Which tax classes are there?
There are classes I to VI. I applies to single people, II to single parents, III, IV and V to married couples and VI to additional employment.
Can the employer change the Steuerklasse?
No. The tax class is set at the tax office, and the employer retrieves it electronically as ELStAM. The employee applies to the tax office for any changes.
What happens if the employer has no Steuerklasse on file?
Without a retrievable feature, the employer must provisionally calculate under Steuerklasse VI. This leads to a higher deduction, which is later settled through the tax return.