What the Fünftelregelung saves on an Abfindung, refunded with the tax return
Estimates only, not financial advice. What you type stays on your device. Checked against sources on 16 Oct 2026.The Fünftelregelung of §34 EStG taxes a severance as if only a fifth of it had been paid, then multiplies that extra tax by five. Because the German tariff rises with income, this is cheaper than adding the whole sum to one year. Since 2025 the employer no longer applies it when withholding wage tax: you get the difference back through the tax return. The page shows both figures and the saving.
2026 · Rates and rules read from the sources listed on this page (the earliest on 16 Oct 2026); they may have changed since.
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A severance (Abfindung) paid because a job ends is taxable income in Germany (§24 EStG), but it is not subject to social insurance contributions, the Deutsche Rentenversicherung confirms. The question is how much income tax it costs, and the answer depends on the rest of your income that year.
The Fünftelregelung (§34 EStG). The tax office first works out the tax on your income without the severance. It then adds a fifth of the severance, works out the tax again, and multiplies the difference by five. Because the German tariff climbs with income, taxing a fifth five times costs less than adding the whole sum to one year. The saving is largest for a large severance on a modest salary, and it disappears when your income is already in the 42% band.
What changed in 2025. The employer no longer applies the Fünftelregelung when it withholds wage tax (§39b EStG). It deducts tax as if the whole severance were ordinary pay, and you receive the difference after filing your tax return. The page shows both figures, so you know what to expect on the pay slip and what to claim back.
The rest of the article, and all 6 questions about Germany Abfindung Calculator 2026 (Abfindungsrechner), are on the Germany Abfindung Calculator 2026 (Abfindungsrechner) page.
The tax depends on your other income that year. With the Fünftelregelung of §34 EStG the tax is five times the extra tax a fifth of the severance would cost. On a 60,000 EUR salary a 30,000 EUR severance costs about 10,500 EUR in 2026, single, without church tax.
The tax on your income without the severance is compared with the tax on that income plus one fifth of the severance. The difference is multiplied by five. Because the tariff rises with income, this is cheaper than adding the whole severance to one year, except for a few euros of rounding when your income is already in the top band.
No. Since 2025 the employer withholds wage tax on a severance as if it were ordinary pay (§39b EStG). The Fünftelregelung is applied when you file your income tax return, and the difference is refunded then.
When the severance is large compared with the rest of your income, for example when it is paid in a year with little salary. When your income is already in the 42% band without the severance, the saving shrinks to almost nothing.
Rates and rules change; check the source before you rely on a figure.
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