Basics
German Payslip Explained: Gross, Net, Deductions
How to read a German payslip: Lohnsteuer, tax class, the four social insurances, and what to check every month and keep for later.
A German payslip (Lohnabrechnung or Gehaltsabrechnung) shows how your gross pay becomes the amount that reaches your bank account. At the top are your personal and tax details, then your earnings, then taxes and social-insurance contributions, and at the bottom your net pay and the payout. Once you know these four blocks, you can read any payslip, whatever the template.
If you came to Germany as an adult, nobody walked you through these lines, yet the payslip matters: banks ask for it before a loan, landlords want proof of income, and the contributions on it build your future pension. When I arrived here myself a few years ago, the system looked just as opaque to me.
How a payslip is structured
Your employer must give you a statement, on paper or digitally, every time you are paid, unless nothing has changed since the last one (§ 108 GewO (opens in a new tab)). A federal regulation sets the minimum content, so the order is almost always the same:
- Header: your personal data, social insurance number, pay period, tax class, child allowances, religious affiliation, and usually your health insurer and tax ID.
- Earnings: base pay, allowances, supplements, overtime and one-off payments such as holiday or Christmas pay, adding up to total gross (Gesamtbrutto). The gross used for tax or social insurance can be lower, for example if part of your salary goes into a company pension.
- Statutory deductions: taxes and social-insurance contributions.
- Net and payout: net pay is gross minus statutory deductions. The payout can differ again, for example through capital-forming payments (VL) or an advance.
The taxes
Lohnsteuer is the income tax on your wages, which your employer withholds and passes on to the tax office. The amount depends on your electronic wage-tax data (ELStAM): tax class, child allowances, any registered allowances and religious affiliation. Your employer retrieves it using your tax ID and date of birth.
Your tax ID (Steuer-ID) has eleven digits. It arrives by post after you first register your address (Anmeldung) and stays the same for life, even if you move, marry or change your name.
The solidarity surcharge (Solidaritätszuschlag) has applied only to higher incomes since 2021. For most employees this line shows zero.
Church tax (Kirchensteuer) is deducted only if you belong to a religious community that levies it. Depending on the federal state, it is 8 or 9 per cent of your Lohnsteuer. What counts is your registration data, so if the religion recorded there is wrong, sort it out with the registration office.
Tax class: what it changes and what it doesn't
| Tax class | Who it applies to |
|---|---|
| I | Single or divorced people, and married people whose spouse lives outside Europe, for example still in Iran |
| II | Single parents entitled to the single-parent relief |
| III | Married people whose spouse is in class V by joint application |
| IV | Married couples, both in IV (the default), optionally with a factor |
| V | Married people, the counterpart to III |
| VI | Any second or further job |
Your tax class decides how much Lohnsteuer is withheld each month, not how much income tax you owe for the year. Lohnsteuer is a prepayment; the final figure comes with your tax assessment, and you get money back or pay the difference. That is why couples using III/V or the factor method must file a tax return.
The choice can also affect benefits such as unemployment benefit, parental allowance (Elterngeld) or maternity pay. You apply for a change at your local tax office; which combination suits you is a question for a tax adviser (Steuerberater) or a wage-tax help association (Lohnsteuerhilfeverein).
The four social insurances
As an employee you normally pay four contributions, and as a rule your employer pays the other half of each; only your share appears as a deduction.
| Abbreviation | Insurance | What it gives you |
|---|---|---|
| RV | Pension insurance | Retirement pension, reduced earning capacity pension, rehabilitation |
| KV | Health insurance | Doctors and hospital, sick pay during longer illness |
| PV | Long-term care insurance | Benefits if you permanently need care |
| AV | Unemployment insurance | Unemployment benefit and help finding work |
When two colleagues with the same gross pay take home different amounts, the health insurer is often the reason: each one sets its own additional contribution (Zusatzbeitrag). Children matter too. People without children pay a care-insurance surcharge from the month after their 23rd birthday and pay it alone, while parents with several children under 25 pay less. For high salaries there is also a contribution ceiling (Beitragsbemessungsgrenze), set each year, above which contributions stop rising.
Accident insurance is paid by your employer alone, so it never shows among your deductions. With private health insurance, you usually see an employer subsidy instead of KV and PV lines. Cover you arrange yourself, such as personal liability insurance, does not appear on the payslip at all.
German terms on your payslip
| German term | Meaning |
|---|---|
| Steuer-Brutto / SV-Brutto | The part of gross pay that tax or contributions are calculated on |
| LSt | Lohnsteuer, income tax on wages |
| SolZ | Solidarity surcharge |
| KiSt (ev/rk) | Church tax, Protestant or Roman Catholic |
| StKl | Tax class |
| Kinderfreibetrag (ZKF) | Number of child allowances, used for the surcharge and church tax |
| BGS | Contribution group code: which social insurances apply to you |
| VL / VWL | Capital-forming payments from your employer |
| bAV | Company pension scheme |
| Auszahlungsbetrag | The amount actually transferred to you |
What to check every month and what to keep
A short monthly look is enough:
- Are your tax class, child allowances, religious affiliation and health insurer correct?
- Do hours, overtime and supplements match what you worked?
- Has your net pay changed for no reason you know of? Ask the payroll office; answering that is part of their job.
- Does the payout arrive in your account exactly as stated?
Keep all payslips and two other documents. The Lohnsteuerbescheinigung (annual wage-tax certificate) goes from your employer to the tax office by the end of February, with a copy for you; you need it for your tax return. The Meldebescheinigung zur Sozialversicherung shows, at least once a year, what your employer reported to the social insurance funds. Those reports feed your pension account; if periods are missing there later, the certificates are your proof. The Deutsche Rentenversicherung (opens in a new tab) gives free advice on sorting out your pension account.
What I look at in a first conversation
Almost every financial decision starts with net income, so the payslip is my starting point. I mainly look at:
- your regular net pay and how much of it fixed costs already take up;
- what the payslip already puts aside for old age (statutory pension, possibly a company pension or VL) and what that means for your retirement planning;
- whether your income has been stable long enough when a loan or mortgage is on the horizon. The bank checks your income from your payslips, because SCHUFA doesn't know it. What it does store is explained in What Is SCHUFA?.
Tax planning belongs with a tax adviser. I explain the lines so you can ask the right questions there.
FAQ
How do I read a German payslip?
Top to bottom, in the four blocks described above. Put two months side by side and you quickly see which line has changed.
What is the difference between gross and net pay?
Gross (Brutto) is your pay for the month before deductions. Net (Netto) is what remains after Lohnsteuer, any solidarity surcharge or church tax, and your four social-insurance contributions.
What do the social insurance lines mean?
RV is pension, KV health, PV long-term care and AV unemployment insurance. Each line shows your half of the contribution; differences between colleagues usually come from the health insurer's additional contribution or the care-insurance surcharge.
If you would like to go through your own payslip with me: the first conversation is free and non-binding, in Stuttgart or online, in Persian, German or English. Call me or send me an email; you'll find the details on the contact page.
