How does changing tax brackets affect my net salary?
January 20, 2022 | 40,00 EUR | answered by Babette Schneider
Dear tax consultant,
My name is Christine Niemeyer and I have been working full-time as an employee in a medium-sized company for five years. So far, I have been classified in tax class 1, as I am single and have no children. My monthly net salary is currently 2,500 euros.
Due to a new life situation, I am considering switching to tax class 4. My partner is also employed and we recently got married. We do not have children and do not plan to have any in the near future. Since he has a higher income than me, switching to tax class 4 would be financially beneficial for us.
However, I am concerned about how this change in tax class will affect my net salary. I would like to know if I will have more money available or if my net salary will decrease. I am also interested in any other options to be optimally positioned for tax purposes and to receive more net income from gross income.
Can you please explain to me in detail how a change in tax class will affect my net salary and whether it would be worthwhile for me to switch to tax class 4 in my case? Are there any alternatives that may be more suitable for us as a childless married couple? I look forward to your expert advice.
Thank you in advance for your help.
Sincerely,
Christine Niemeyer
Dear Mrs. Niemeyer,
Thank you for your inquiry regarding a possible switch to tax class 4. As a tax advisor, I would be happy to assist you and explain how such a change could affect your net salary.
In general, switching to tax class 4 is usually beneficial for married couples without children when one partner earns significantly more than the other. Since your partner has a higher income, switching to tax class 4 could be financially advantageous for you. In tax class 4, both incomes are taxed together, which could potentially reduce your overall tax burden.
However, it is important to note that your net salary may be affected by switching to tax class 4. Since a higher tax rate is applied in tax class 4 compared to tax class 1, your net salary may initially decrease. This is because the joint taxation of incomes may result in more taxes being deducted than in tax class 1.
There are ways to optimize your tax situation and increase your net income. One option could be to choose a favorable combination of tax classes. For example, your partner could switch to tax class 3 while you remain in tax class 5. This could result in lower overall taxes and an increase in your net salary.
Another option could be to apply for tax allowances at the tax office or claim tax-deductible expenses to reduce your tax burden. I would be happy to assist you with this and provide you with individual tax tips to optimize your financial situation.
Overall, I would recommend seeking comprehensive advice to find the best solution for your tax situation. I am available for a personal consultation to answer your questions and assist you in making a decision.
I hope this information has been helpful. Please do not hesitate to contact me if you have any further questions or would like to schedule a consultation.
Best regards,
Babette Schneider
Tax Advisor
