Here are the key numbers for 2025. The basic tax-free allowance (Grundfreibetrag) is €11,600 for single filers and €23,200 for married couples filing jointly. This is the same as 2024. Above that, the tax rate starts at 19% and increases progressively. At €18,130 of taxable income, the rate is 19%. At €62,410, it jumps to 42%. At €180,000, it jumps to 45%. And at €277,675, it hits the top rate of 47.5%.
What changed from 2024 to 2025? The threshold at which the 42% rate kicks in moved from €62,409 to €62,410—a negligible shift. The threshold for the 45% rate moved from €180,000 to €180,001. Again, negligible. So why are people paying more?
The answer is bracket creep. Even though the thresholds barely moved, inflation means your salary probably increased. If you earned €70,000 in 2024 and earned €72,000 in 2025 (a 2.9% raise to match inflation), you're now paying tax on €72,000 instead of €70,000. The extra €2,000 is taxed at the marginal rate, which is 42%. That's an extra €840 in income tax, even though the tax rates themselves didn't change.
But there's more. Germany also adjusted the solidarity surcharge (Solidaritätszuschlag) in 2025. This is a 5.5% surcharge on income tax that was originally meant to fund German reunification but has become a permanent feature of the tax code. The surcharge applies to income tax above a certain threshold. In 2025, the threshold is €16,956 for single filers. If you earn above that, you pay the surcharge on your income tax bill.
For someone earning €100,000, the 2025 tax bill is roughly €32,000 to €35,000 (depending on state, church tax, and other factors). That's an increase of a few hundred euros compared to 2024, mostly due to bracket creep and inflation adjustments.
For someone earning €200,000, the increase is more noticeable—roughly €1,000 to €1,500 more in tax compared to 2024. The top marginal rate of 47.5% applies to a larger portion of income, so the impact compounds.
There's also the question of social security contributions. In 2025, the employee contribution to social security is 19.5% of gross salary (split between employee and employer). This is separate from income tax and is mandatory. So if you earn €100,000, you're paying roughly 19.5% in social security contributions (€19,500) plus 32-35% in income tax (€32,000-€35,000), for a total tax and social security burden of roughly 51-54%. This is one of the highest combined rates in Europe.
For expats, the tax increase matters because it affects your cost of living and your financial planning. If you're on a fixed salary and your employer doesn't give you a raise to match inflation, you're effectively taking a pay cut. If you're self-employed or a freelancer, you need to raise your rates to maintain your after-tax income.
There's also the question of whether the tax increase will be followed by more increases. Germany faces a budget deficit and aging population, which means pressure to raise taxes or cut spending. Some economists predict further tax increases in the coming years. If you're planning a long-term move to Germany, you should factor in the possibility of higher taxes in the future.
One bright spot: Germany allows various deductions and credits that can reduce your tax bill. If you're self-employed, you can deduct business expenses. If you have children, you can claim child allowances (Kindergeld). If you're paying for continuing education or training, you can deduct some of those costs. If you're paying into a private pension (Riester-Rente), you can deduct contributions. These deductions can save you thousands of euros per year, but you have to know about them and claim them.
For expats, the most important deduction is the foreign earned income exclusion if you're a US citizen. But that's a US tax benefit, not a German one. For German tax purposes, you're subject to the same rates and rules as German citizens.
If you're an expat in Germany and you're concerned about the tax increase, you have a few options. First, you can work with a tax advisor (Steuerberater) who specializes in expat taxes. They can help you identify deductions and credits you might be missing. Second, you can negotiate a raise with your employer to account for inflation and the tax increase. Third, you can consider whether staying in Germany makes financial sense given the tax burden. For some expats, the quality of life, healthcare, and social benefits in Germany outweigh the high taxes. For others, the taxes are a dealbreaker.
The bottom line: German income taxes are high and getting higher. If you're moving to Germany or already living there, factor in a combined tax and social security burden of roughly 50% on income above €60,000. Plan your finances accordingly.
