Payroll in Germany 2026: contributions, Lohnsteuer and payslips

In Germany the employer runs payroll: it withholds wage tax (Lohnsteuer), the solidarity surcharge and any church tax according to the employee's electronic tax data, deducts the employee's half of social security and adds its own half. For a typical employee in 2026 the employer pays about 21% on top of gross salary, plus small levies.

Payroll in Germany at a glance

Social security contributions in 2026

The four branches of social insurance are paid as one total contribution (Gesamtsozialversicherungsbeitrag) to the employee's health insurer, the Krankenkasse, which acts as collecting agency. Employer and employee each pay half, with two exceptions: the care surcharge for the childless is paid by the employee alone, and the levies and accident insurance are paid by the employer alone.

What to watch:

• The add-on depends on the insurer. Each Krankenkasse sets its own Zusatzbeitrag. The Federal Ministry of Health announced an average of 2.9% for 2026, but you deduct the employee's actual rate, split half and half.
• Care insurance. The rate has been 3.6% since 1 January 2025. Childless employees aged 23 or over pay a 0.6-point surcharge on their own. Parents with at least two children under 25 get 0.25 points off for each child from the second to the fifth. In Saxony the employee pays 2.3% and the employer 1.3%.
• Ceilings. The annual ceilings are €101,400 for pension and unemployment and €69,750 for health and care. Above €77,400 a year an employee is no longer compulsorily insured in statutory health insurance.
• Minijobs and Midijobs. Up to €603 a month in 2026 a job is a Minijob: the employer pays flat contributions (15% pension and 13% health) and, if it does not use the employee's tax data, a 2% flat tax, all to the Minijob-Zentrale. From there up to €2,000 a month is the transition zone (Übergangsbereich), where the employee's contributions are reduced.
• Employer-only levies. U1 reimburses employers with up to 30 employees for up to 80% of the sick pay they continue to pay; U2 reimburses maternity pay in full and applies to all employers. The U3 insolvency levy is 0.15% of pay subject to pension insurance.
• Accident insurance is paid by the employer alone to its Berufsgenossenschaft. The contribution is calculated after the year end as pay × risk class × contribution rate ÷ 1,000, so it differs by sector.

Lohnsteuer: how wage tax is withheld

Lohnsteuer is an advance payment of the employee's income tax. You retrieve each employee's electronic tax data (ELStAM) from the tax administration: tax class I to VI, child allowances and church membership. Payroll software then applies the annual income-tax tariff in § 32a of the Income Tax Act. For 2026 it reads:

The tariff is not applied to gross pay. The Federal Ministry of Finance publishes a Programmablaufplan, the official algorithm behind its Lohnsteuer calculator, that turns the monthly wage into an annual amount and deducts, for tax classes I to V, the employee lump sum of €1,230, the €36 lump sum for special expenses and a Vorsorgepauschale for the employee's pension, health, care and (within a cap) unemployment contributions. The tax on the result is divided by 12 for a monthly payroll.

Solidarity surcharge. It is 5.5% of the Lohnsteuer, but only once the annual Lohnsteuer exceeds €20,350 (€40,700 in tax class III), with a sliding zone in which it is capped at 11.9% of the excess. Most employees pay none.

Church tax. For members of a church that levies it, church tax is 9% of the Lohnsteuer, 8% in Bavaria and Baden-Württemberg. The ELStAM tells you whether to withhold it, and it is paid with the Lohnsteuer.

Minimum wage, working time and mandatory pay

• Minimum wage. The statutory minimum wage rose from €12.82 to €13.90 an hour on 1 January 2026 and rises to €14.60 on 1 January 2027 (Fifth Minimum Wage Adjustment Ordinance). At 40 hours a week, €13.90 is about €2,409 a month.
• Minijob limit. It is tied to the minimum wage: €556 until 2025, €603 a month in 2026 and €633 from 2027. Check the hours of your Minijobs before each increase.
• No statutory 13th salary. A Christmas bonus or holiday pay is owed only if the employment contract, a works agreement or a collective agreement provides for it.
• Working time. The Working Hours Act limits work to 8 hours a working day, extendable to 10 if the average stays at 8 hours over six calendar months or 24 weeks. It sets no overtime premium; premiums come from contracts or collective agreements.
• Annual leave. At least 24 working days a year based on a six-day week, which is 20 days for a five-day week.
• Sick pay. After four weeks of employment, the employer continues to pay wages for up to six weeks of illness.

Monthly payroll calendar and filings

1. 1Before the first hire: apply online to the Federal Employment Agency's Betriebsnummer service for an establishment number, which you need for every social security report.
2. 2New employees: register each one with their Krankenkasse with the first payroll after they start, and at the latest within six weeks, and retrieve their ELStAM.
3. 3Every month, contributions: send the contribution statement (Beitragsnachweis) electronically two working days before the due date; the contributions are due on the third-last bank working day of the month in which the work is done, so you estimate the month's pay before it ends.
4. 4By the 10th of the following month: file the Lohnsteuer-Anmeldung electronically with the Finanzamt and pay the Lohnsteuer, solidarity surcharge and church tax. The return is quarterly if last year's Lohnsteuer was more than €1,080 but not more than €5,000, and annual if it was €1,080 or less.
5. 5Every year: send each employee's Lohnsteuerbescheinigung to the tax administration by the end of February, report the year's pay to your Berufsgenossenschaft by 16 February, and pay the accident insurance assessment, usually due by 15 May.

What a payslip must show. Under § 108 of the Trade Regulation Act you give the employee a pay statement in text form with each payment. It shows the pay period and how the pay is made up: the pay itself, premiums, allowances and other payments, the deductions, and any advances. If nothing has changed since the last statement, a new one is not required.

Records. Keep a payroll account (Lohnkonto) for each employee and each year until the end of the sixth calendar year after the last entry, and keep the social security pay records until the end of the calendar year after the last social security audit.

Worked example: €4,000 a month in tax class I

An employee in tax class I, single, no children, aged over 23, statutory health insurance at a Krankenkasse with the average 2.9% add-on, outside Saxony, no church membership, 2026:

How the Lohnsteuer is reached: the annual wage of €48,000 minus the €1,230 employee lump sum, the €36 lump sum and a Vorsorgepauschale of €9,672 (pension €4,464 at 9.3%, health and care €5,208 at 7.0% + 1.45% + 2.4%) gives €37,062. The 2026 tariff on that is €6,294 a year, or €524.50 a month. We computed it with the BMF's Programmablaufplan 2026, the algorithm of the official calculator. The Lohnsteuer of €6,294 is below €20,350, so there is no solidarity surcharge. The U1 and U2 levies and accident insurance add a small amount that depends on your Krankenkasse and Berufsgenossenschaft.

Common mistakes

1. 1Paying contributions a month late. They are due in the month the work is done, not with the Lohnsteuer on the 10th of the next month.
2. 2Using the average add-on instead of the employee's own Krankenkasse rate.
3. 3Forgetting the childless surcharge, or the care reductions for parents of two or more children under 25, which need proof of the children.
4. 4Mixing up the ceilings: €8,450 for pension and unemployment, €5,812.50 for health and care.
5. 5Letting a Minijob drift over the limit when the minimum wage rises: €603 in 2026, €633 in 2027.
6. 6Filing the Lohnsteuer-Anmeldung quarterly when last year's Lohnsteuer exceeded €5,000.
7. 7Missing the 16 February report to the Berufsgenossenschaft, which then estimates your pay.

How Clientlly helps

Clientlly ships a built-in payroll profile for Germany: the income-tax bands and allowance as modelled, the employee and employer contribution rates, the contribution ceilings and the minimum wage, checked against official sources in October 2026. It calculates gross to net and the employer contributions, produces payslips, and supports recurring payroll adjustments and imports of employees and payroll data; an administrator can adjust the rates in the payroll tax settings.

The German profile approximates the official Lohnsteuer formula, so check the withholding against the BMF calculator. It models one employee in a primary job, single, without dependants, at federal level, so church tax, the Midijob zone, the Saxony care split, other tax classes and collective agreements must be checked separately.

Alongside payroll, the human resources module handles leave requests and approvals with a leave calendar and HR documents, and attendance and time tracking records working hours and overtime. To close the books after the payroll run, see our month-end close checklist.