Income tax, solos, KV: this is how you understand your payroll

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At the end of each month it is in the mailbox or in the company portal, the pay slip.

Perhaps you briefly check whether the salary corresponds to what is in the employment contract, or take a look at the final payment to the checking account.

Then the note disappears in the folder.

However, especially for young professionals, it is important to take a leisurely look at the statement at least once a year.

After all, money is unnecessarily lost if mistakes are made in the calculation.

But what do the many numbers and abbreviations mean?

We explain that here using the pay slip of a fictional young professional: Marie McMoney.

She is 22 years old and works as an office clerk, of

, she leaves almost

.

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Gross earnings

As a young professional, Marie earns 

 per month.

In addition, your employer pays the costs for your public transport ticket in the amount of 

.

The amount is added to the gross salary and at the end subtracted from the net wage because the employer processes the payment for it (see point 11).

Since the ticket costs less than 44 euros per month, Marie does not have to pay tax on this so-called benefit in kind.

income tax

Marie has to

 wage tax

from her gross salary 

- it is the largest deduction that the

professional has to cope with

month.

As a single, Marie is assigned to income tax class I.

The amount of income tax in Germany also depends on the amount of income: Those who earn more also have to pay more taxes.

Marie pays around 12.34 percent wage tax with an annual gross income of 32,400 euros.

12.34%

 (wage tax) of 

 (gross income) = 

Church tax

Marie is Protestant, so she has to pay church tax.

The churches use this money to finance their staff, the maintenance of churches and charitable purposes such as care services.

The amount of the deduction depends on the one hand on the salary and on the other hand on the federal state in which the employee works.

Marie works in Bavaria:

8% 

(church tax) of 

 (wage tax) = 

Solidarity surcharge (solos)

Since 1991, German employees have been paying a solidarity surcharge, also known as solos.

It serves as an additional levy to finance German unity.

Marie has to hand over 5.5 percent of the wage tax to the tax office:

5.5%

 (solidarity surcharge) of 

 (wage tax) = 

Tax deductions

All in all, Marie's tax deductions amount to:

333.25 euros

 (wage tax) + 

 (church tax) + 

 (solidarity surcharge) = 

Health insurance (KV)

Health insurance in Germany is a so-called compulsory insurance because it is required by law for everyone.

From a certain income limit (62,550 euros per year, i.e. around 5200 euros per month), you can decide for yourself whether you are insured with a statutory or private health insurance company.

Marie is legally insured.

In general, the contribution rate for health insurances is 14.6 percent, and each health insurance company may request an individual additional contribution.

Both contributions - the statutory and the additional - are shared equally by the employer and employee.

Marie's fund raises an additional contribution of 0.7 percent.

Therefore, the total contribution in her case is 15.3 percent, so that she and her employer currently each pay 7.65 percent. 

7.65%

(health insurance contribution) of

(salary) =

Pension Insurance (RV)

German employees are obliged to pay into the statutory pension insurance.

This means that they are entitled to a pension in old age.

Marie pays a contribution of 9.3 percent of her gross wage for this, her employer pays the same amount.

So you share the total of 18.6 percent pension contribution rate in equal parts.

9.3%

 (contribution to pension insurance) of 

 (salary) = 

Unemployment Insurance (AV)

In order for Marie to be covered in the event of unemployment and to be able to receive unemployment benefits, she has to pay a monthly contribution of 1.2 percent for unemployment insurance.

Here, too, your employer pays the other half of the total of 2.4 percent.

1.2%

(contribution to unemployment insurance) of

(salary) =

Long-term care insurance (PV)

Anyone who needs care at some point needs help.

That is why there is long-term care insurance.

The contribution rate is currently 3.05 percent.

However, there is also a special contribution rate for childless people in long-term care insurance. 

Because Marie has no children, her contribution rate is 3.55 percent.

Marie and her employer also share these contributions.

Of the 3.55 percent, Marie has to pay 1.775 percent.

1.775%

(contribution to long-term care insurance) of

(salary) =

Social insurance deductions (social security deductions)

All in all, Marie's social security deductions amount to:

206.55 euros

 (health insurance) + 

 (pension insurance) + 

 (unemployment insurance) + 

(long-term care insurance) = 

Payout amount

This leaves Marie with a net income of 

, minus the cost of the public transport ticket (see point 1), Marie receives 

 to her account.

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