Finances: Most couples choose tax classes 3 and 5

The majority of married couples and life partners continue to opt for the tax class combination 3 and 5. This is evident from the data from the wage and income tax statistics for the 2020 assessment year, as announced by the Federal Statistical Office in Wiesbaden. According to this, of the total of around 5.3 million jointly assessed taxpayers with income exclusively from employment, almost 2.1 million couples chose this tax class combination. This corresponds to a share of 39 percent.

According to the information, in another 1.3 million couples (25 percent), only one of the two people earned income and was therefore classified in tax class 3. 1.9 million taxpayers who filed jointly were registered in tax class 4. With a share of 36 percent, this choice was only just behind the combination 3 and 5.

Tax classes 3 and 5 about to be abolished

From 2030, the tax brackets for married couples and life partners are set to change. Although they do not affect the final amount of tax to be paid, they do enable couples to have more money available until the final tax return, almost like an interest-free loan from the tax office. Up to now, couples with different incomes have used the combination of tax brackets 3 and 5 for this purpose. The high earner benefits from higher allowances in tax bracket 3, while the partner with the lower salary has considerably higher deductions in tax bracket 5.

This means that both of them have the best possible net income each month – but they must expect to pay additional taxes at the end of the year. In addition, low earners can quickly get the impression that their work is not worth it.

Frequent additional payments

The federal government now wants to abolish the two tax classes 3 and 5. Instead, from 2030, partners will automatically fall into tax class 4 using the so-called factor method. The tax office will then calculate exactly who contributes how much net income. This will distribute the income tax burden more fairly between married couples and life partners. The bottom line is that the tax burden for couples will not change, but back payments will become less frequent.

In 2020, according to the Federal Statistical Office, in almost 46 percent of cases, couples with a combination of tax classes 3 and 5 had to pay additional taxes. Taxpayers in tax class 4 who were assessed jointly only had to pay additional taxes in just under 5 percent of cases. They could usually expect refunds when they submitted their annual tax return, it was said. According to the information, these were more than twice as high as for couples in the tax class combination 3 and 5, totaling just under 3.3 billion euros in 2020. In total, they received a refund of just under 1.5 billion euros in income tax.