How is a tax rate calculated

Tax rate for taxes in Germany

Calculate tax rate

In order to be able to initiate the tax rate calculation, the tax amount must be looked up in an income tax table. The tax amount is then multiplied by 100. The result is divided by the annual gross income.

The calculation is very simple:

  • Tax rate = tax amount x 100 / taxable income

In Germany, the entry tax rate is 14%. This initial tax rate then experiences a progressive increase of up to 42%. In addition, there is a basic allowance up to which no taxes have to be paid. If the income is higher, the top tax rate is due. This is paid as tax from a legally regulated income level. Between the tax rate of 0% and the top tax rate of 45%, the tax rate is levied as a percentage of income. However, the calculation of the tax rate is not that easy, because it increases with a minimal increase in income.

With this calculation of the tax rate, only the annual gross income is calculated. However, the tax rate on the taxable income can also be determined, which can be found in the tax assessment for the previous year. The amount of tax paid is also noted there.

Tax rate in Germany

The percentage of a taxable amount that is payable as tax is called the tax rate. There are different taxes in Germany that have different tax rates, including:

The tax rate is given as a monetary amount per unit of value (10 euros per 100 euros of income). However, it can also be given as a percentage of the calculation base (5% of income).

Tax rate for various taxes

value added tax

There are different tax rates for sales tax in Germany. For companies, sales tax is due right at the start of the activity. For many companies this means taxing their turnover at 19%. But there are also sales taxable at a reduced rate of 7%. This includes, among other things, food, overnight stays in hotels or plants. The tax rates for an agricultural and forestry business can be between 5.5% and 10.7%.

Income tax

The personal circumstances of the taxpayer play an important role for income tax. So there is no fixed tax rate for income tax.

  • The income tax rate increases with the amount of income. Families and single parents have to pay less income tax.

Business tax

The trade tax is set by the municipalities. After all, commercial enterprises cause various burdens on the municipalities. This includes, for example, supplying companies with electricity, water and gas, but also building and maintaining paths and access roads to companies. The trade tax serves as a financial compensation for all these burdens.

Corporation tax

Corporate income tax is a corporate expense and only has to be paid by corporations. Corporations are legal entities. Corporate income tax is 15% on taxable income. The legal person submits a corporate tax return. Corporate income tax is paid on the profits generated.

Gift tax / inheritance tax

There are different tax rates for gift and inheritance tax - depending on the relationship between the taxpayer and the donor or testator. An example of gift and inheritance tax:

Ratio of the taxpayer to the donor or testator in the case of a taxable acquisition of up to 6 million eurosGift and inheritance tax as a percentage
Spouse19
Brothers30

Calculate inheritance tax!

Tax Rate in Germany: Important Facts

  • The tax rate is adjusted to the corresponding tax
  • Depending on the type of tax, a separate law determines the tax rate
  • As with income tax, the tax rate can vary
  • The tax rate describes the amount of tax to be paid

Individual references and sources

Income Tax Act: Different tax rates >>

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