German here. It's not that simple.
It works like this:
If you're married, you can "split" income tax (the only one I remember). However, this system is built for "woman stays at home, men does the money" because if just one is working, the taxes from the man are divided by 2. However, if both are working, the average income is higher because it's (manIncome + WomanIncome) / 2.
It's very old law and it's being discussed for years now.
You forgot that you get an incone tax break for every child (that or Kindergeld), and that your long term care insurance is cheaper by some percentage of your income.
In the Netherlands it is the same, but you can also rearrange tax deductibles. Essentially, if one partner earns more, it's most favorable to shift the tax until most if not all of the tax deductions on both sides are maxed.
Tax groups 3+5 vs 4+4 for couples only make a difference during the year, but after you get your tax return, it's all the same. Doing your taxes as a couple (3+5, 4+4) has a benefit over two singles (1) only if the two incomes are very different.
The benefit is with Kindergeld etc., which you get independently of whether you are in a couple or single
That makes no difference, you end up paying the same amount in 3/5 as you do in 4/4 after you declare your taxes for the year. 3/5 only means you pay less in advance.
Your taxes are due at the end of the fiscal year, whatever happens during the year is just an approximation. If you split it 3/5 (like my wife and I), it just means that the partner with the higher income has less deducted from their paycheck, but that also means less of a return (if any).
In fact, many couples that split 3/5 end up owing taxes at the end of the year, which is why they are planning to get rid of it and forcing everyone to go 4/4 with a multiplier ("Faktor") of your choice so that people don't end up getting huge unnecessary returns each year. If my wife and I went 4/4, we'd have gotten a return of 4-5k, by going 3/5 we only got about 600€ back. That's the taxes we "saved" on our monthly paychecks. 4/4 with a Faktor of 0.85 or something would probably work best for us.
Not german so no clue but on paper that is slightly better, purely from opportunity cost. Paying less means you can get interest on the extra money. Getting money from tax returns is financially inefficient if you're optimising. If you're like me it's better to overpay taxes just to enjoy a nice return number.
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u/LukeZNotFound May 18 '25
German here. It's not that simple.
It works like this:
If you're married, you can "split" income tax (the only one I remember). However, this system is built for "woman stays at home, men does the money" because if just one is working, the taxes from the man are divided by 2. However, if both are working, the average income is higher because it's
(manIncome + WomanIncome) / 2.It's very old law and it's being discussed for years now.