More net from the gross – how much will the tax relief bring in 2023?

Five tips for the New Year

Created: 12/30/2022 8:03 am

More money in the new year: Almost all employees can count on tax relief in the coming year.

The higher the earnings, the greater the plus.

(symbolic photo) © dpa/(symbolic image)

For almost all employees, the net wage increases at the turn of the year.

High earners have the biggest plus, as our overview shows.

Munich - 2023 the basic tax allowance will increase considerably.

Employees therefore have to pay less tax.

In the case of social insurance, on the other hand, it will be somewhat more expensive.

On average, employees have to pay 0.25 percentage points more in contributions.

The total is now 20.225 percent.

For childless people over the age of 23, 0.35 percentage points are added.

What is the development in the individual social insurances?

Tax relief 2023: pension and health insurance

social security

The contribution rate for pension insurance remains unchanged at 18.6 percent.

Insured pay 9.3 percent of it.

The contribution to unemployment insurance increases from 2.4 to 2.6 percent.

Employees pay half of that.

The contribution rate for long-term care insurance is 3.05 percent for insured persons with a child.

Employers and employees share this.

Childless people pay 0.35 percentage points more – without employer participation.

Special rules apply in Saxony.

health insurance contribution

The general contribution rate for statutory health insurance remains at 14.6 percent.

In addition, there is an “insurance-specific additional contribution”.

This will increase by an average of 0.3 percentage points to 1.6 percent in 2023.

The differences between the funds are still considerable.

Important to know: Employers and employees each share half of the full contribution.

Tip:

When it comes to the additional contribution to health insurance, it is worth comparing health insurers.

Because each health insurance company determines this contribution according to its financial situation.

The range for the additional contribution is currently between 0.6 and 1.7 percent.

Insured persons with a gross income of 3,000 euros pay an additional monthly contribution of 0.6 percent for health insurance.

With an additional contribution of 1.7 percent, it is 25.50 euros.

A change of health insurance company can be worthwhile.

In 2023, you will not usually be informed by letter about a contribution increase.

A duty of the health insurance companies is suspended until mid-2023.

A precise check of the pay slip is therefore urgently recommended.

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If the statutory health insurance company increases their contribution, insured persons have a special right of termination, whereby a notice period of two full months must always be observed.

The termination does not have to be declared personally.

Those who want to change can simply select a new health insurance fund.

This then takes care of the termination and change modalities.

assessment limits

Do employees who earn very well also pay social security contributions on their full income?

The answer is no.

Contributions are only charged up to the contribution assessment limit of the respective insurance.

In health and long-term care insurance, this is 4,987.50 euros in 2023, i.e. almost 5,000 euros.

In 2022 it was still 4,837.50 euros.

Tip:

For employees who earn 5,000 euros or more per month, private daily sickness allowance insurance can be worthwhile.

Because the sick pay is calculated based on the contribution assessment limit of 4,987.50 euros.

The contribution assessment ceiling in the pension and unemployment insurance is significantly higher.

This year in western Germany it will increase by EUR 250 to EUR 7,300 per month.

Accordingly, high-income employees will have to pay higher social security contributions in 2023.

supply gap

Is there a pension gap for employees with very high incomes?

For the part of the income that exceeds 7,300 euros (West Germany), no contributions to pension and unemployment insurance are paid.

Accordingly, the maximum amount of unemployment benefit is capped.

The same applies to pension insurance.

Insured persons can therefore only acquire pension entitlements amounting to a good two pension points (earning points) per year.

No entitlements are credited to the pension account for the part of the gross salary that is above the contribution assessment limit.

In any case, there is a supply gap here.

Tip:

It is particularly worthwhile for high-earning employees over the age of 50 to make compensation payments to the pension fund for expected pension reductions.

This is always possible if, based on the insurance periods stored in the pension account up to the time of payment, there is a realistic possibility that at the age of 62 (severely disabled pension) or 63 years (old-age pension for long-term insured persons) there will be an entitlement to an early old-age pension.

Alternatively, those affected can save for old age via ETF savings plans and unit-linked pension insurance.

mandatory limit

There is only a compulsory insurance limit for health and nursing care insurance.

It applies nationwide and will increase to EUR 5,550 gross per month in 2023 (2022: EUR 5,362.50) or EUR 66,600 per year.

Anyone who receives a higher salary is usually exempt from insurance and can choose between voluntary statutory or private health insurance (PKV).

Fewer and fewer employees are taking advantage of the opportunity to join private health insurance: there are now 3.07 million high earners (September 2022) who are voluntarily insured by law, although the doors of private health insurance were open to them.

In 2010 it was 1.72 million.

For those who were privately insured at the end of 2002, the compulsory insurance limit is EUR 4,987.50 per month (EUR 59,850 per year).

Tip:

Some privately insured people slip back into compulsory insurance due to the increased compulsory insurance limit.

They can then usually switch to statutory health insurance – provided they are not yet 55 years of age or older.

There is no statutory health check.

Tax relief in 2023: Net income increases for almost all employees

Less

New tax rules ensure that the net income of almost all employees increases despite higher social security contributions.

The basic tax allowance increases in 2023 to 10,908 euros and in 2024 to 11,604 euros (compared to 10,347 euros in 2022).

Furthermore, the full pension expenses will be tax deductible in future - up to a maximum of EUR 26,527.80.

Double the amount applies to married and officially civil partners.

Originally, only 96 percent of the expenses should be tax deductible in 2023.

As in previous years, the key values ​​of the income tax rate will also be adjusted.

If you imagine a coordinate system, the tax rate is shifted “to the right”.

Higher tax rates are therefore only due with a higher income.

This is intended to compensate for the so-called cold progression.

High earners benefit

What will change in net wages at the end of the year?

There is definitely a plus.

Since employees with very high incomes in particular benefit from tax relief, they record a particularly high net plus at the turn of the year.

Employees in tax class I or IV, who earn a gross monthly income of 7,000 euros, still get a monthly plus of 82 euros (with children, no church tax, tax class IV) - without further tax deductions.

For comparison: With a monthly gross of 2,000 euros, the monthly plus is only 16 euros (see table).

single parent

For single parents who have a taxable income, 2023 will bring further relief.

The Annual Tax Act 2022 increased the tax relief to EUR 4,260 (EUR 355 per month).

This amount applies to the first child.

There is an increase of 240 euros for each additional child.

Single parents with three children are entitled to an annual tax credit of 4,740 euros.

Tip:

Single parents can claim the relief amount in their tax return.

However, it makes more sense to apply for tax class 2.

The relief will then be taken into account in the monthly payroll.