How to calculate Income Tax in Germany?

Question

In order to calculate my net salary I am using this calculator and it works pretty well: I have the exact same numbers on my payslips.

I am able to calculate every tax by myself starting from my gross salary apart from the "income tax". I can't understand precisely how it is calculated.

I read on wikipedia that it should be 0% below 9168 €/ per year and it should increase from 14% to 24% on the part of your salary above 9168 €/per year, up to 14255 €/per year. But if I put, say, 14255 €/per year in the calculator, it says 203 (4% of 14255-9168) and not and not 1220.88 (24% of 14255-9168).

Do you know why?

I know that it is a very complicated procedure but I am curious about it!

Answer 1

First, you should not apply the tax formula (the one you found on Wikipedia) to the gross income, but only to the taxable income ("zu versteuerndes Einkommen" is the term you want to research).

Second, the tax formula works differently from your assumption: in your example, 24% is not the tax rate on all income above the Grundfreibetrag (9168€), it is only the marginal rate (roughly speaking, it is the rate applied to the last euro). The explicit formula is in Paragraph 32a Einkommensteuergesetz).

Update due to comment of Bremen000

The general calculation of the taxable income is a very broad question and I can't give an exhaustive answer.

The official definition is in the Programmablaufplan. There is a pretty good calculator here (I am in no way affiliated to this site), but it will take you some time to understand all the steps.

Answer 2

In addition to @WerKater's answer, be aware that most jobs in Germany pay additional 'vacation money' and 'Christmas money' ('Urlaubsgeld' and 'Weihnachtsgeld'), which leads to you getting about 13.2 monthly salaries per year (your exact number might differ).

As this is known to the HR making your paychecks, they often calculate your tax higher for the normal months, by multiplying it by 13.2 (or whatever is your number) for the annual salary, not by 12, as you might think - this avoids a sudden jump up in taxes when you get these extra payments.