Germany Income Tax Rates: 2026 Guide and 2017-2018 Historical Slabs
German taxation depends on the assessment year, taxable income, marital status, tax residence and the source of income. This guide explains the current rules and preserves the historical 2017 tax brackets for reference.
Important: Germany normally assesses personal income tax by calendar year, not by a combined 2017-2018 financial year. The historical table below applies to 2017; 2018 had different thresholds. Figures below are taxable income, not gross salary, and marginal rates are not flat rates on all income.
Personal income tax brackets in Germany for 2026
Under Section 32a of the Income Tax Act (Einkommensteuergesetz, EStG), Germany applies a progressive income tax formula. The following bands describe the 2026 basic tariff for a single taxpayer.
| Annual taxable income (EUR) | Income tax treatment |
|---|---|
| Up to 12,348 | 0% basic allowance |
| 12,349 to 17,799 | Progressive formula beginning at a 14% marginal rate |
| 17,800 to 69,878 | Progressive formula increasing towards 42% |
| 69,879 to 277,825 | 42% marginal rate |
| 277,826 and above | 45% marginal rate |
The exact liability in the progressive bands is determined by the statutory formula, not by multiplying the entire income by a single percentage. Certain types of income follow special rules. The Federal Ministry of Finance's 2026 Section 32a guidance sets out the formulas.
Germany personal income tax rates for 2017
These historical thresholds are provided for taxpayers researching the original 2017-2018 article. They are not the applicable 2026 rates.
| Taxable income in 2017 (EUR) | Rate or treatment |
|---|---|
| 0 to 8,820 | 0% |
| 8,821 to 13,769 | Progressive formula starting at 14% |
| 13,770 to 54,057 | Progressive formula increasing to 42% |
| 54,058 to 256,303 | 42% marginal rate |
| 256,304 and above | 45% marginal rate |
Source: official 2017 Section 32a EStG guidance. In 2018, the basic allowance rose to EUR 9,000; the 2017 brackets must not be used to calculate 2018 tax.
Married couples and joint assessment
Eligible spouses or registered partners may elect joint assessment under Section 26 EStG. Under the splitting method in Section 32a(5), tax is generally calculated on half of the couple's combined taxable income and the result doubled. For 2017, the basic zero-tax threshold was therefore EUR 17,640, with the 42% band beginning above EUR 108,114 and the 45% band above EUR 512,606. In 2026, the corresponding basic allowance for joint assessment is EUR 24,696. Actual eligibility and deductions matter.
Tax residence and non-resident liability
Section 1 EStG generally subjects individuals with a German residence or habitual abode to unlimited income tax liability, ordinarily covering worldwide income subject to applicable treaties. Section 8 of the Fiscal Code (AO) defines residence, while Section 9 AO governs habitual abode, generally including a continuous stay exceeding six months subject to exceptions. Non-residents may be taxed on German-source income under Section 49 EStG. Citizenship alone ordinarily does not establish German tax residence.
Tax on rental income and depreciation
German property rental income is generally taxable under Section 21 EStG. Expenses incurred to earn and preserve rental income can generally be deductible subject to Section 9 EStG and other restrictions. Examples include qualifying repairs, interest and depreciation.
Building depreciation is governed by Section 7 EStG. Depending on building completion date and statutory eligibility, the straight-line rate may be 2%, 2.5% or 3%; certain new residential buildings may qualify for other methods. Land itself is not depreciable. Under Section 6(1) No. 1a EStG, qualifying renovation expenditure exceeding 15% of building acquisition cost (excluding VAT) within three years of purchase can be treated as acquisition-related production costs rather than immediately deductible repairs.
Capital gains tax on German real estate
For individuals, Section 23 EStG generally taxes gains from selling privately held real estate within ten years of acquisition. Statutory owner-occupation exemptions may apply, including qualifying use in the year of sale and the two preceding calendar years. Taxable private-sale gains ordinarily enter the progressive personal income tax calculation. Sales by businesses and corporations follow different rules, so the 15.825% corporate income tax figure must not be treated as a universal property-sale tax.
Investment income such as certain dividends and securities gains may instead fall under the separate 25% capital income tax rules in Section 32d EStG, plus applicable surcharges and exceptions.
Inheritance and gift tax
The Inheritance and Gift Tax Act (ErbStG) governs transfers on death and lifetime gifts. Under Section 2, the scope of taxation depends in part on the residence of the deceased, donor or recipient, and on whether assets are situated in Germany. Sections 15 and 16 establish tax classes and personal allowances; Section 19 provides graduated tax rates. Applicable treaty relief, family relationships and exemptions can materially change the outcome.
Corporate income tax and trade tax in Germany in 2026
Under Section 23 of the Corporation Tax Act (KStG), the standard corporation tax rate is 15% through 2027. A solidarity surcharge of 5.5% of corporation tax adds 0.825 percentage points, producing 15.825% before municipal trade tax. The corporation tax rate is scheduled to decline to 14% in 2028 and by one percentage point each year until 10% from 2032.
Trade tax (Gewerbesteuer) is separately levied under the Trade Tax Act (GewStG). Its effective rate depends on the municipality's multiplier and the statutory base rate, so there is no single nationwide combined corporate tax rate. Germany Trade & Invest's corporate tax guidance describes a combined burden of around 30% on average, varying by location.
Returns, payroll withholding and solidarity surcharge
Employers generally withhold wage tax (Lohnsteuer) from salaries. Income tax filing requirements and deadlines depend on the taxpayer's circumstances and whether a tax adviser is engaged; see Section 149 AO. The solidarity surcharge is governed by the Solidarity Surcharge Act and is substantially restricted for many individual income tax payers, while it continues to apply to corporation tax. Church tax can also apply where relevant.
Official legislation and reference materials
- Income Tax Act (EStG)
- Corporation Tax Act (KStG)
- Trade Tax Act (GewStG)
- Federal Ministry of Finance: tax changes in 2026
General educational information, updated 23 October 2026. Tax consequences depend on the assessment year, facts and applicable treaties; consult a qualified adviser for individual advice.