This combination of tax classes is chosen by most pairs
With tax classes 3 and 5, the most popular combination for couples will be abolished. Therefore, millions of people affected need to adjust. Starting from 2030, this should result in an advantage for them.
Couples and life partners still predominantly choose the tax class combination 3 and 5. This is evident from the data of the wage and income tax statistics for the assessment year 2020, as the Federal Statistical Office announced. Accordingly, of the approximately 5.3 million jointly taxable taxpayers with only income from non-self-employed work, around 2.1 million couples chose this tax class combination. This corresponds to a share of 39%.
Furthermore, according to the information, another 1.3 million couples (25%) had income from only one person, who was therefore in tax class 3. 1.9 million jointly taxable taxpayers were registered in tax class 4. With a share of 36%, this choice was only slightly behind the combination 3 and 5.
Starting from 2030, the tax classes for couples and life partners will change. They do not influence the final amount of taxes to be paid. However, they allow couples to have more money available until the final tax declaration, in a way, a interest-free loan from the tax office.
Currently, couples with differing incomes use the combination of tax classes 3 and 5 for this purpose. The higher earner benefits from higher deductions in tax class 3, while the partner with lower income has significantly higher deductions in tax class 5. Together, they have the best possible net income at their disposal - but they have to reckon with having to pay taxes at the end of the year. In addition, for low-income earners, the impression may quickly arise that their work does not pay off.
Automatically tax class 4 from 2030
The federal government wants to abolish tax classes 3 and 5. Instead, partners should fall automatically into tax class 4 with the so-called factor method from 2030. The tax office then calculates exactly how much net income each person contributes. The tax burden on married couples and life partners should thus be distributed more fairly. Under the hood, the tax burden for couples should not change, but fewer adjustments should be necessary.
According to the data, around 46% of cases of couples with a combination of tax classes 3 and 5 had to make a payment in 2020. Jointly taxable taxpayers in tax class 4, on the other hand, only had to make a payment in about 5% of the cases. They could usually offset these payments when submitting their annual tax declaration with refunds, it was stated.
These refunds amounted to approximately 3.3 billion Euros in total in 2020, more than double the amount for couples in tax class 3 and 5. They received a total of around 1.5 billion Euros in income tax refunds.
Couples who currently rely on the tax class combination 3 and 5 for their financial planning will need to adapt to the new tax policy starting from 2030, as tax classes 3 and 5 will be abolished. Due to this change, they might find it beneficial to familiarize themselves with the new tax guide and the process of filing a tax declaration under the new system.
