The federal government is planning to abolish tax brackets 3 and 5. This would have consequences for married couples and registered partnerships.
Dortmund – The total of six tax brackets have a major impact on monthly net income.
After the wedding, married couples are spoiled for choice.
You have to decide between wage tax classes 3, 4 or 5 – for now.
Tax classes 3 and 5 before the end - consequences for millions of people in Germany
Because the federal government now wants to get down on tax brackets 3 and 5 – they are to be abolished.
"We want to further develop family taxation in such a way that partnership responsibility and economic independence are strengthened with a view to all types of families," says page 115 of the coalition agreement between the SPD, Alliance 90/The Greens and the FDP.
It is not yet known exactly when the government's plan will be implemented, reports RUHR24.
"As part of an improved digital interaction between taxpayers and the financial administration, we will transfer the combination of tax classes III and V to the factor procedure of tax class IV, which can then be used easily and unbureaucratically and creates more fairness," the government announced.
Tax classes 3 and 5 before the end: This means the income tax classes for married couples
What is all this for and what do the tax classes and their combination mean in detail?
For married couples and registered civil partnerships, a combination of wage tax classes 3/5 and 4/4 has been possible so far.
In the first variant, the higher earning part of the couple - currently mostly the man - can be grouped into tax bracket 3.
The second partner - usually the woman - is in class 5 and pays higher deductions there.
This is known as so-called spouse splitting.
The Federal Agency for Civic Education explains this as follows: “Not every spouse has to pay taxes on their income alone, but the income of both spouses is added together and then halved.
For this divided sum, the income tax is calculated and then doubled.
This procedure gives spouses an advantage if one partner earns significantly more than the other.”
This is what the income tax classes mean in detail:
Tax class 1 (single):
Characteristics: Tax class for single, separated (in the year after the separation) or divorced, widowed employees (in the second year after the death).
Tax burden: high tax burden.
Tax class 2 (single parent):
Characteristics: Single employees with one or more tax-deductible children with whom you live alone in a household.
Tax burden: like tax class 1, but with allowance for a tax credit for single parents.
Tax class 3 (married/partner):
Characteristics: Tax class for a spouse/life partner (Person A) who does not live separately from their spouse/life partner permanently.
In addition, tax class 5 must be used for person B if wage tax is due for person B.
Tax burden: combination tax class 3/5 or 5/3;
Tax class 3: lower tax burden;
Tax class 5: higher tax burden.
Tax class 4 without factor (married/partner):
Characteristics: Tax class for a spouse/life partner (Person A) who does not live separately from their spouse/life partner permanently.
In addition, tax class 4 without a factor
must also be used
for person B.
Tax burden: high tax burden.
Tax class 4 with factor (married/partner):
Characteristics: Tax class for a spouse/life partner (Person A) who does not live separately from their spouse/life partner permanently.
In addition, tax class 4 with a factor
must also be used
for person B.
Tax burden: like tax class 4 without a factor and taking into account tax advantages through spouse splitting.
Tax class 5 (married/partner):
Characteristics: Tax class for a spouse/life partner (Person A) who does not live separately from their spouse/life partner permanently.
In addition, tax class 3 must be used for person B if wage tax is due for person B.
Tax burden: combination tax class 3/5 or 5/3;
Tax class 3: lower tax burden;
Tax class 5: higher tax burden.
Tax class 6 (additional employment/independent of marital status):
Characteristics: Employees with several jobs at the same time.
As a rule, tax class 6 is used for part-time work.
Tax burden: highest tax burden.
Source: Financial administration for North Rhine-Westphalia
Tax classes 3 and 5 before the end: Disadvantages for women - that's why the government is planning a reform
In an interview with the
Handelsblatt
, Family Minister Lisa Paus (54, The Greens) and Economics Minister Robert Habeck (53, The Greens) emphasized: “Almost half of the women in this country work part-time: At 48.8 percent, Germany has one of the highest part-time rates in Europe .
For men it is only 11.5 percent.”
At the same time, they focus on "gender equality in working life" as a "central issue of justice and freedom".
After all, economic independence is one of the prerequisites for a self-determined life and for building up one's own prosperity (more news on the subject of finance on RUHR24).
As the table above shows, the lower-earning partner – usually the woman – has a higher tax burden in tax bracket 5, which in turn is more than offset by the advantages in tax bracket 3 from the higher earner.
In any case, the wage tax is only finally settled with the tax return at the end of the year.
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The federal government plans to abolish tax brackets 3 and 5.
© Steinach/Imago
Tax classes 3 and 5 before the end: This is the difference to the tax combination 4/4
As the
Focus
reports, the tax class combination 3/5 regularly leads to larger back tax payments in practice.
A transfer of spouses to 4/4 with a factor should result in the wage tax paid each month being very close to that actually due.
This would result in few or no additional payments.
A leaflet from the Federal Ministry of Finance states: “With the factor method, the income tax deduction is very precisely approximated to the probable annual tax liability.
In this way, higher additional payments (and possibly also income tax prepayments) can be avoided, which can occur with the combination of tax classes III/V.”
Tax classes 3 and 5 before the end: concrete example shows advantages and disadvantages
How this is presented in detail is shown by a concrete example from the ministry, where an annual income of 36,000 euros is estimated for spouse A and an annual income of 20,400 euros for spouse B.
If both spouses are socially insured in all branches, they deduct an income tax of 4939 euros together with the tax combination 4/4 without a factor, with 4128 euros being attributable to spouse A and 811 euros to spouse B.
The expected income tax in the splitting procedure is 4780 euros.
The couple should therefore look forward to a refund of 159 euros at the end of the year.
Tax classes 3 and 5 before the end: High tax arrears - advantage of tax class combination 4/4
In the tax class combination 4/4 with a factor of (0.967), the married couple would pay 4775 euros in income tax, of which 3991 euros goes to spouse A and 784 euros to spouse B.
According to the Federal Ministry of Finance, with that combination there would be “neither a high back payment nor a refund”.
However, the situation is significantly different with the tax class combination 3/5.
Since the jointly assessed couple would only have paid 4001 euros in income tax (1058 euros for spouse A and 2943 euros for spouse B), they would have to make an additional payment of 779 euros.
List of rubrics: © Steinach/Imago