Tax on a German severance with the Fünftelregelung (§34 EStG) and what you keep
Estimates only, not financial advice. What you type stays on your device. Checked against sources on 16 Oct 2026.A single employee in Germany earning 60,000 EUR who receives a 30,000 EUR severance in 2026 pays about 10,500 EUR income tax on it with the Fünftelregelung of §34 EStG, against 11,753 EUR without it, and keeps 19,500 EUR. No social insurance is due on it.
2026 · Rates and rules read from the sources listed on this page (the earliest on 16 Oct 2026); they may have changed since.
Type the severance in euros and your gross salary for the year it is paid, without the severance.
Say whether you are assessed jointly with a spouse and whether you pay church tax.
Read the tax on the severance with the Fünftelregelung, without it, and the saving.
Keep the difference in mind: the employer withholds in full, and the tax return pays the saving back.
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.
Formula. Tax on the severance = 5 x (T(R + A/5) - T(R)), where T is the 2026 tariff of §32a EStG, R the taxable income without the severance and A the severance. The solidarity surcharge and church tax follow the income tax, so their share is the difference with and without the severance.
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.
From gross salary. If you type a gross salary, the page deducts the 2026 employee contributions to pension, health (with the average Zusatzbeitrag) and care insurance, the 1,230 EUR Arbeitnehmer-Pauschbetrag and the 36 EUR Sonderausgaben-Pauschbetrag, the way the Germany Income Tax Calculator does. If you know your taxable income from a tax notice, type that instead.
Not included. Unemployment benefit in the same year, which raises the rate through the Progressionsvorbehalt; a severance paid in two years, which loses the Fünftelregelung; other income and deductions. An estimate from the law, not tax advice.
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.
Not on a severance paid as compensation for losing the job: the Deutsche Rentenversicherung says it is not subject to contributions. Payments for wages, holiday or bonuses already earned before the job ended are ordinary pay and are.
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.
Unemployment benefit in the same year (Progressionsvorbehalt), a severance paid in two instalments over two years, other income, and deductions beyond the standard ones. It assumes the statutory health insurance with the average Zusatzbeitrag when it starts from a gross salary.
Rates and rules change; check the source before you rely on a figure.
Still stuck? Ask about Germany Abfindung Calculator 2026 (Abfindungsrechner) and anybody who knows can answer. No account needed.
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