When choosing the tax class, spouses now have the option of using the so-called factor method. The factor method is based on the anticipated common income tax. When deducting income tax, it relieves the spouse who earns less and burdens the spouse who earns more.
The fact that the lower-earning spouse has a higher net income can be important for married couples who expect parental, unemployment, sickness, or bankruptcy benefits in the near or medium term. The calculation is based on the net wage for the past 12 months for all these payments. The factor procedure is requested informally from the tax office. The office uses the two underlying incomes to calculate a factor that divides the incomes (hence the name). The exemptions are also included in the calculation of the factor. In addition to the factor, therefore, no allowances can be entered as an income tax deduction feature. Using the tax return calculator happens to be essential there.
How do the tax classes differ?
- Tax class I applies, among other things, to unmarried or divorced employees, as well as to married / partnered, but permanently separated spouses / life partners.
- Tax class II includes employees for whom the so-called relief amount for single parents is taken into account (unless tax classes III, IV and V are considered). The relief amount is paid to single parents whose household includes at least one child who has to be taken into account for tax purposes and for whom they are entitled to the allowances for children or child benefit. There are other requirements (see question 13).
- Tax brackets III, IV and V apply to married employees and registered partners. If both spouses / life partners receive wages, they can also choose the factor method instead of the tax class combinations III / V or IV / IV.
Tax class III makes sense if a spouse is the main earner. Tax class IV makes sense if both spouses / life partners earn roughly the same amount. Tax class V applies to the lower-earning spouse if the other spouse is classified in tax class III. The factor method makes sense if the spouse wants the wage tax deduction to be greater for the higher-earning spouse so that the lower-earning spouse has a higher net income than with tax class V. It is not possible to say in a generally binding manner which combination is cheaper.
The following rule of thumb has proven to be helpful:
The combination IV / IV leads to an even wage tax deduction for both spouses / life partners and should therefore be chosen with approximately the same income.
The combination III / V leads to a lower wage tax deduction for the spouse with tax class III and a higher deduction for the other spouse with tax class V. This combination should be selected if one spouse receives significantly more wages than the other.