Working in Germany: Understanding Your Net Wage
Are you looking for a job in Germany or considering whether moving there is worth it?
Germany has a robust social security system, and as an employee, you’re entitled to a variety of rights. However, along with your rights, it’s important to be aware of your responsibilities as well.
Was verdient man in Deutschland
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Gross Wage vs. Net Wage
Gross Wage: This is the total salary agreed upon in your employment contract before any deductions. It includes your base salary and any additional allowances or bonuses.
The gross wage is generally subject to contractual freedom. This means that it is up to you to negotiate your salary with your employer.
However, in Germany there is a lower limit: the statutory minimum wage (Mindestlohn).
Net Wage: This is the amount you take home after all mandatory deductions are subtracted from your gross wage.
Mindestlohn: Minimum wage in Germany
Since January 1, 2024, the statutory minimum wage in Germany has been 12.41 euros gross per hour. This means that your employer must pay you at least 12.41 euros per hour. No other agreement is permitted.
From 2025, the lowest wage threshold will rise to 12.82 euros.
- For a full-time position, you therefore earn at least € 2,151.07
Employment contracts often state that a certain amount of overtime is already included in your monthly salary. However, if you only receive the minimum wage, this is not permitted!
Average income in Germany
Incomes vary greatly depending on qualifications and sector. According to the Federal Statistical Office, the average income in Germany in 2023 was around 4300.00 euros per month.
But as I said, what you end up with really depends on your personal situation.
So let’s take a look at what else is deducted from your gross salary.
What remains of the gross
You have to pay tax on your income in Germany. How much income tax you pay depends, among other things, on your income tax bracket. The German state uses income tax brackets to try to balance out inequalities. For example, a family pays less tax as a percentage than a single person.
As mentioned at the beginning, there is a large social safety net in Germany. The high level of social security is partly financed directly and partly through tax revenues.
For you, this means that deductions are made from your gross income.
Social Security Contributions in Germany
Germany has a social insurance system that covers various areas. Strictly speaking, social insurance comprises several types of insurance: Health insurance, pension insurance, unemployment insurance and long-term care insurance.
Everyone who is employed pays contributions into these systems. In general, you and your employer share the contributions. Your employer pays them for you.
Let’s take a look at the individual components:
Health Insurance in Germany
Health insurance is compulsory in Germany.
It is up to you to decide which statutory health insurance company you insure yourself with. The contribution is 14.6% of your gross income. The individual health insurance funds differ in terms of benefits and the amount of the additional contribution, which is between 1.0% and 2.7% of your income.
It is therefore worth comparing health insurance companies!
Pension Insurance in Germany
Your pension contributions are used to pay pension benefits to those who retire.
The amount of the pension depends on various factors, such as the length of time you have paid contributions and your average income while working. There are different types of pensions, including the old-age pension for people of retirement age, the disability pension for people who can no longer work due to health problems, and survivors’ pensions for the family members of deceased pensioners.
Pension insurance is intended to ensure that people are financially secure in old age or in the event of disability and can earn a living. However, you should also make private provision for your old age.
Half of your contributions are paid by your employer, who also pays your share directly.
Unemployment Insurance in Germany
Unemployment insurance is also part of the German social security system, where employees and employers pay contributions into the unemployment insurance scheme.
If someone becomes unemployed, they can receive unemployment benefit, which replaces part of their previous income and helps to bridge financial shortfalls while they look for a new job.
The contribution rate for unemployment insurance is calculated as a percentage of gross income and is paid half by the employee and half by the employer. For example, the contribution rate in 2022 was 2.4% of gross income, with employees and employers each paying 1.2%. These contributions finance unemployment benefit and other unemployment insurance benefits (for example, certified certificate translation for professional recognition).
Taxes and fees
In addition to social security contributions, other deductions are made from gross wages in Germany. These include, among others:
- Income tax: Income tax is withheld directly by the employer and paid to the tax office. The amount of income tax depends on income and personal circumstances such as marital status and number of children.
- Solidarity surcharge: The solidarity surcharge is an additional tax levied on wage and income tax. It was introduced to cover the costs of German unification after reunification.
- Church tax: If you are a member of a religious community that levies tax (usually the Catholic or Protestant Church), church tax is also deducted from your salary. This is also deducted directly by the employer and paid to the relevant religious community.
There is also the broadcasting fee – also known as the GEZ. It is not paid by the employer but directly by the contribution service.
The broadcasting fee is a charge levied in Germany to finance public broadcasters such as ARD, ZDF and Deutschlandradio.
Every household, regardless of whether it owns or uses a receiver, must pay this contribution. The amount of the broadcasting fee is set per household and is independent of the number of people or devices in the household. It is independent of income, but you can be exempted if you have a low income or receive state benefits.
The broadcasting fee is used to produce and broadcast programs that are intended to provide a broad range of information and entertainment for the population.
Calculating Your Net Wage
To give you an idea of how much money you’ll actually have left, we’ve provided a few examples.
Are you earning minimum wage, living in Hamburg, not a member of a church, with no children and unmarried? You’ll have around €1,560 left from your gross salary. If you’re married, it would be around €1,700.
If you live in Bavaria with your two children, are married, a member of the Catholic Church, and in tax class III, you’ll have €2,900 left from your gross monthly salary of €4,000. If you’re unmarried and without children, it would be €2,560.
You can get an overview of your personal situation with a gross-to-net calculator.
To find out about the costs of renting an apartment, check out our article on “Living Expenses in Germany“.
What about your experience?
How did you feel with your first salary in Germany? We can imagine that you were surprised that you didn’t get paid your full salary!
Or did you choose Germany because of the good social network?
Leave us a comment and share this post with your friends, who should definitely know what’s left of the gross!
