This article is adapted from the business magazine Capital and is available here for ten days. Afterwards it will only be available to read at www.capital.de. Like stern, Capital belongs to RTL Deutschland.
In the coalition agreement at the end of 2021, the SPD, FDP and Greens agreed to abolish the combination of tax classes 3 and 5 for married couples and registered civil partnerships. Everyone who uses the combination should instead automatically slip into tax class 4 with a factor. Now the Federal Ministry of Finance is working on a concrete reform proposal – and is heating up people’s tempers. Criticism comes mainly from Bavaria. CSU boss Markus Söder rejects the plans and claims that “that would mean less net of the gross, especially for families.” What is the truth behind the accusation?
The fact is: tax brackets do not affect the final tax amount, even though many couples are subject to this misunderstanding. They simply make it possible to practically distribute the tax over the course of the year. They only have an effect on the monthly income tax deduction, a more or less rough preliminary calculation. The final cash hit comes with the tax return.
The combination of tax classes 3 and 5 is particularly worthwhile for married couples who earn different amounts. The higher earner chooses the favorable tax class 3. This means that he or she receives both basic allowances, their own and that of their spouse. As a result, the tax deduction from wages drops enormously. The other partner, who earns less, falls into tax class 5. He or she no longer benefits from tax allowances, so taxes are deducted even on a low wage. The combination 3/5 makes the pay slips of married higher earners look good and shifts the tax burden to the other person.
After the end of the calendar year, a tax return is mandatory. The tax office then does the math again. This can quickly lead to hefty back taxes. The tax class combination 3/5 only takes spouse splitting into account very generally, without taking the actual income distribution into account.
In the other tax class combination for married people, the 4/4 with factor, the splitting tariff is incorporated much more fairly. When it comes to payroll, the factor ensures that both spouses pay the share of income tax that they have on their joint income. In the end, you still have to submit a tax return, but the total income tax paid during the year should roughly correspond to the income tax calculated by the tax office. This avoids additional payments.
According to the federal government’s plans, everyone who currently uses the 3/5 tax class combination should in future automatically switch to the 4/4 combination with a factor, which, according to the coalition agreement, is “simple and unbureaucratic to use and creates more fairness”.
In any case, moving away from tax classes 3/5 would be timely and, above all, fairer for married women. In practice, they often earn less than their partner and therefore end up in tax class 5. The high deductions mean that there is hardly anything left of their already low salary. The gloomy outlook sometimes prevents wives from taking up employment or increasing their working hours in order to earn more. Because working hours in tax class 5 have little noticeable effect on the monthly net wage. A transition to the 4/4 tax class combination with a factor would make pay slips fairer and could thus create an incentive to break out of the part-time trap.
In addition, the combination of tax classes 3 and 5 can have a disadvantageous effect if the lower-earning person is in class 5 and expects wage replacement. The amount of benefits such as parental or unemployment benefits depends on the previous net earnings. In order to increase net salary and wage replacement, married couples must swap their tax classes in good time. Depending on the type of wage replacement, strict deadlines apply so that a more favorable tax class actually has an effect. In some cases this is hardly possible. With the tax class 4/4 plus factor you can save yourself the trouble of tax class tactics.
The combination of 4/4 with factor primarily prevents disadvantages for the partner who is currently in tax class 5. The tax class combination 3/5 does not save taxes, at best it provides a time advantage. If it disappears, it will not increase a couple’s income tax. Critics like Markus Söder who claim this do not want to strengthen families in general, but rather maintain a traditional family model with a main earner.