Germany Income Tax Rates: 2018-2019 Historical Slabs and 2026 Tax Guide

Updated 23 October 2026 | German tax law overview

German taxation depends on taxable income, tax residence, income category and the assessment year. This guide preserves the 2018 tax schedule and explains the rules applicable in 2026 for individuals, property owners, non-residents and companies.

German personal income tax rates for 2018

Under section 32a of the German Income Tax Act (Einkommensteuergesetz, EStG), the 2018 basic allowance was EUR 9,000 for a single taxpayer. The tax-free threshold and progressive-rate zones were as follows.

Married spouses qualifying for joint assessment generally benefit from the splitting method under section 32a(5) EStG: tax is calculated on half their combined taxable income and doubled. This effectively doubles the single-assessment thresholds, but is not a separate flat-rate schedule.

Official historical source: Federal Ministry of Finance, section 32a EStG (2018).

German income tax rates for 2026

The current section 32a EStG provides the following 2026 bands for a single assessment. These apply to taxable income after eligible deductions, rather than gross salary.

Income tax can be accompanied by a solidarity surcharge where applicable and church tax for qualifying members of recognized religious communities. The solidarity surcharge is not simply imposed on every taxpayer at 5.5% of taxable income; it is assessed on the relevant tax liability subject to statutory thresholds.

Official law: 2026 section 32a EStG.

Tax residency and liability in Germany

Under section 1 EStG, an individual with a domicile (Wohnsitz) or habitual abode (gewöhnlicher Aufenthalt) in Germany is generally subject to unlimited income tax liability on worldwide income, subject to applicable tax treaties. Sections 8 and 9 of the Fiscal Code (Abgabenordnung, AO) define domicile and habitual abode. A continuous stay of more than six months ordinarily establishes habitual abode, subject to statutory exceptions; this is not merely a test of citizenship.

Non-residents may be liable for German income tax on specified German-source income under sections 1(4) and 49 EStG. Tax treaties can change taxing rights and provide double-tax relief.

Rental income and property depreciation

Rental income generally falls under section 21 EStG. Deductible expenses under section 9 EStG can include qualifying mortgage interest, management costs, repairs, insurance and depreciation, subject to detailed rules and limitations.

For buildings, section 7(4) EStG sets depreciation rates according to building type and completion date. For many residential buildings completed after 1924 and before 2023, the standard straight-line rate is 2% per year; qualifying residential buildings completed after 31 December 2022 generally use 3%. Older buildings and special construction incentives can be subject to different rules. The historic description of 3% for the first eight years should not be treated as a general rule.

Under section 6(1) no. 1a EStG, qualifying repair and modernization expenses incurred within three years of purchase may become acquisition-related production costs when the statutory 15% threshold is exceeded, subject to exceptions.

Capital gains on German real estate and investments

Under section 23(1) no. 1 EStG, gains from a private sale of German real estate are generally taxable when the period between acquisition and sale does not exceed ten years. The law provides important exceptions for property used for the owner's own residential purposes. Taxable gains are ordinarily subject to the individual's progressive income tax rate.

Capital gains on shares and other qualifying financial investments are subject to separate rules, including sections 20 and 32d EStG. A 25% investment-income tax rate generally applies to covered private investment income, with a solidarity surcharge and potentially church tax, subject to exceptions and allowances.

Companies disposing of real estate are not automatically taxed at a standalone 15% rate: corporate income tax, the solidarity surcharge, municipal trade tax and special exemptions or adjustments may be relevant.

Inheritance and gift tax

The German Inheritance and Gift Tax Act (Erbschaftsteuer- und Schenkungsteuergesetz, ErbStG) taxes qualifying transfers on death and lifetime gifts. Under section 2 ErbStG, unlimited tax liability may arise where the deceased, donor or recipient is a German resident within the statutory definition. Where unlimited liability does not apply, certain German-situs assets may still be taxable.

Allowances under section 16 ErbStG depend on the family relationship. Rates under section 19 ErbStG depend on the value of the taxable acquisition and tax class. Cross-border transfers may require treaty analysis and consideration of foreign tax credits.

Corporate income tax and trade tax in 2026

Under section 23 of the Corporation Tax Act (Körperschaftsteuergesetz, KStG), the standard corporation tax rate for 2026 is 15%. A solidarity surcharge of 5.5% on that tax produces a combined corporate income tax and surcharge burden of 15.825% before municipal trade tax.

Trade tax (Gewerbesteuer) is calculated using a statutory 3.5% tax measurement rate and the municipality's multiplier (Hebesatz). The legal minimum multiplier is generally 200%, corresponding to a 7% trade tax rate; actual rates often exceed this. Consequently, the total corporate tax burden varies by municipality and commonly approaches 30%.

Under the legislated schedule, the corporate income tax rate is due to fall to 14% in 2028, 13% in 2029, 12% in 2030, 11% in 2031 and 10% from 2032, subject to future legislative change.

Official sources: KStG section 23 and Germany Trade & Invest: Corporate taxation.

Returns, deductions and official legal references

German employees generally have wage tax withheld by their employer. Filing obligations and deadlines vary with income sources, assessment status, adviser involvement and legislative extensions. For current filing guidance consult ELSTER, Germany's official online tax portal.

Useful legislation includes the Income Tax Act (EStG), Fiscal Code (AO), Corporation Tax Act (KStG), Trade Tax Act (GewStG) and Inheritance and Gift Tax Act (ErbStG).

This overview is general information, not individualized tax advice. Tax treatment depends on the assessment year, facts, residence and any applicable tax treaty.