We often hear the terms “gross salary” and “net salary”. In this section we would like to explain the difference between gross and net salaries and provide information about social security and taxes.
Your gross salary forms the foundation of your income in Germany. nevertheless, several taxes will be deducted directly from your gross salary before your salary is disbursed. Your received salary is therefore your ultimate net salary.
“Taxes” and “social security contributions” are subtracted from your gross salary. Afterward, you will find the final breakdown on your payslip. However we would like to provide you with a brief overview of gross-to-net income through two example calculations, which are solely presented here in a hypothetical context:
Let’s assume that you receive a gross salary of 2,000 euros per month, Are single, have no children, have statutory health insurance and fall into tax class 1. This could lead to the following breakdown:
Gross salary: 2,000 euros per month and 24,000 euros per year
Total deductions: 622.57 euros per month and 7,470.84 euros annually
Net salary: 1,377.43 euros per month and 16,529.17 euros annually
Let’s assume you have a gross salary of 2,000 euros per month, you are in a civil partnership, you have statutory health insurance and fall into tax class3. This could lead to the following breakdown:
Gross salary: 2,000 euros per month and 24,000 euros per year
Total deductions: 418.44 euros per month and 5,021.28 euros annually
Net salary: 1,581.56 euros per month and 18,978.72 euros annually