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Gross Salary in Germany – Definition, Deductions & Calculation for HR

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Gross Salary in Germany – Definition, Deductions & Calculation for HR

Gross salary (German: Bruttogehalt) is the total amount agreed upon in the employment contract before taxes and social security contributions are deducted. On average, 30-40% is deducted from the gross amount – what remains is the net salary that actually arrives in your bank account. For HR professionals, the employer gross (Arbeitgeberbrutto) is equally important: the total personnel costs including the employer's share of social security contributions.

Definition: What Is Gross Salary?

Gross salary refers to the total remuneration that employees are entitled to according to their employment contract – before taxes and social security contributions are deducted. The term originates from the Latin word "brutto," meaning "raw" or "unrefined."

In Germany, references to "monthly salary" or "annual income" in job postings and employment contracts almost always refer to the gross amount. This makes sense because only the gross salary allows for fair comparison between different positions – the actual deductions depend on individual factors such as tax class, number of children, and health insurance provider.

Difference: Gross Salary vs. Net Salary

Net salary (from Latin "netto" = pure) is the amount that arrives in your account after all deductions. The difference between gross and net amounts to approximately 30-40%, depending on income and personal circumstances.

Difference: Salary vs. Wages

Although the terms are often used interchangeably, there is a subtle difference: Salary (Gehalt) is a fixed monthly amount, while wages (Lohn) are based on actual hours worked or units produced and can therefore fluctuate. In everyday language, "gross salary" and "gross wages" are now generally used synonymously.

Components of Gross Salary

Gross salary consists of various components:

Base Salary

The base salary forms the fixed, monthly consistent core of the gross salary. It compensates for the contractually agreed work performance and usually accounts for the largest portion.

Variable Salary Components

In addition to the base salary, the following components can increase the gross salary:

  • Overtime compensation
  • Bonuses and premiums (performance or success-based)
  • Commissions (e.g., in sales)
  • Supplements for night, Sunday, or holiday work
  • Holiday pay and Christmas bonuses

Benefits in Kind and Monetary Advantages

Non-monetary benefits also count toward the gross salary, such as:

  • Company car for private use
  • Job ticket (public transport pass)
  • Meal subsidies
  • Company pension scheme (employer contribution)

These benefits in kind must be taxed and subject to social security contributions – they therefore increase the gross amount from which deductions are calculated.

Deductions from Gross Salary

Two types of deductions are made from the gross salary: taxes and social security contributions.

Social Security Contributions 2025

Social security contributions are shared equally between employee and employer. The employee's share totals approximately 21% of the gross salary.

Insurance Total Contribution Employee Share
Health Insurance 14.6% + supplementary contribution (avg. 2.5%) 7.3% + approx. 1.25%
Pension Insurance 18.6% 9.3%
Long-term Care Insurance 3.4% 1.7% (childless persons over 23: 2.3%)
Unemployment Insurance 2.6% 1.3%

ontributions are only calculated up to the respective contribution assessment ceiling (Beitragsbemessungsgrenze). For health and long-term care insurance, this is €5,512.50 per month in 2025; for pension and unemployment insurance, it is €8,050.

Income Tax and Tax Classes

Income tax (Lohnsteuer) is a form of income tax that your employer remits directly to the tax office. The amount depends on your tax class:

  • Tax Class I: Single, divorced, widowed
  • Tax Class II: Single parents with children
  • Tax Class III: Married (higher income)
  • Tax Class IV: Married (equal income)
  • Tax Class V: Married (lower income)
  • Tax Class VI: Second or side job

The higher the income and the less favorable the tax class, the more income tax is deducted.

Church Tax and Solidarity Surcharge

Members of the Protestant or Catholic Church pay an additional 8% (Bavaria, Baden-Württemberg) or 9% (all other federal states) of their income tax as church tax.

The solidarity surcharge (5.5% of income tax) has been eliminated for most employees since 2021. It is only levied on annual gross incomes exceeding approximately €96,000 (single) or €192,000 (married).

Employer Gross: What Employees Really Cost

For HR professionals, the so-called employer gross (Arbeitgeberbrutto) is crucial alongside the gross salary. It includes all costs that an employer must incur for an employee.

The employer gross consists of:

  • Gross salary
  • Employer's share of social security (approx. 20-22%)
  • Levies (U1, U2, insolvency levy)
  • Accident insurance (paid entirely by the employer)

As a rule of thumb: The actual personnel costs are approximately 20-25% above the gross salary. For a gross salary of €4,000 per month, the company incurs total costs of approximately €4,800-5,000.

Calculating Gross Salary: Example Calculation

How much net remains from €4,000 gross? Here is an example calculation for a single person without children, Tax Class I, in North Rhine-Westphalia:

Gross Salary: €4,000.00

Employee Deductions:

Item Amount
Health Insurance (7.3% + 1.25% supplementary) -€342.00
Pension Insurance (9.3%) -€372.00
Long-term Care Insurance (2.3% childless) -€92.00
Unemployment Insurance (1.3%) -€52.00
Income Tax (Tax Class I) -approx. €473.00
Church Tax (9%, if member) -approx. €42.57
Total Deductions -€1,373.57

Net Salary: approx. €2,626.43

This corresponds to approximately 65.7% of the gross salary. Without church tax liability, it would be approximately €2,669 net (66.7%).

Frequently Asked Questions About Gross Salary

What is the difference between gross salary and net salary?

Gross salary is the total amount before all deductions – as stated in the employment contract. Net salary is the amount remaining after deduction of taxes and social security contributions, which is transferred to your account. The difference amounts to approximately 30-40% depending on individual circumstances.

What is deducted from the gross salary?

The following are deducted from the gross salary: income tax (depending on tax class and income), health insurance (approx. 8.5%), pension insurance (9.3%), long-term care insurance (1.7-2.3%), unemployment insurance (1.3%), and where applicable, church tax and solidarity surcharge.

How high are the social security contributions in 2025?

Total social security contributions amount to approximately 41.9% of the gross salary in 2025. Employees and employers each bear approximately half. The employee's share is around 21% of the gross wage.

What is the employer gross?

The employer gross refers to the total costs that an employer incurs for an employee. It includes the gross salary plus the employer's share of social security and other levies – approximately 20-22% in addition to the gross salary.

What is the contribution assessment ceiling?

The contribution assessment ceiling (Beitragsbemessungsgrenze) is an income limit up to which social security contributions are calculated. Income above this threshold is no longer subject to contributions. In 2025, it is €5,512.50 per month (health/long-term care insurance) or €8,050 per month (pension/unemployment insurance).

How does a salary increase affect net pay?

A gross increase does not result in an equally high net increase. Reason: Progressive taxation means that higher incomes are taxed at a higher percentage. Social security contributions also increase proportionally (up to the contribution assessment ceiling). Rule of thumb: Approximately 50-60% of a salary increase remains as net.

Which tax class applies to which marital status?

Single, divorced, and permanently separated persons receive Tax Class I. Single parents with children receive Tax Class II. Married couples can choose between combinations III/V or IV/IV – depending on how incomes are distributed.

How do I calculate net salary from gross salary?

For an accurate calculation, it is best to use a gross-net calculator (e.g., from AOK, Sparkasse, or Stiftung Warentest). These consider all individual factors such as tax class, federal state, number of children, and health insurance supplementary contribution.

Conclusion

Gross salary is the central figure in every employment relationship – for employees as a basis for comparison, for HR professionals as the foundation for personnel cost planning. The key understanding is: Approximately 30-40% of the gross goes to taxes and social security contributions, while employers bear an additional approximately 20-22% of the gross in ancillary wage costs.

For precise calculation in personnel planning, you should therefore always work with the employer gross – the actual cost factor per employee.

Would you like to learn more about modern HR topics? Discover more articles in the Aivy HR Blog or learn about objective aptitude diagnostics at aivy.app.

Sources

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Gross Salary in Germany – Definition, Deductions & Calculation for HR

Gross salary (German: Bruttogehalt) is the total amount agreed upon in the employment contract before taxes and social security contributions are deducted. On average, 30-40% is deducted from the gross amount – what remains is the net salary that actually arrives in your bank account. For HR professionals, the employer gross (Arbeitgeberbrutto) is equally important: the total personnel costs including the employer's share of social security contributions.

Definition: What Is Gross Salary?

Gross salary refers to the total remuneration that employees are entitled to according to their employment contract – before taxes and social security contributions are deducted. The term originates from the Latin word "brutto," meaning "raw" or "unrefined."

In Germany, references to "monthly salary" or "annual income" in job postings and employment contracts almost always refer to the gross amount. This makes sense because only the gross salary allows for fair comparison between different positions – the actual deductions depend on individual factors such as tax class, number of children, and health insurance provider.

Difference: Gross Salary vs. Net Salary

Net salary (from Latin "netto" = pure) is the amount that arrives in your account after all deductions. The difference between gross and net amounts to approximately 30-40%, depending on income and personal circumstances.

Difference: Salary vs. Wages

Although the terms are often used interchangeably, there is a subtle difference: Salary (Gehalt) is a fixed monthly amount, while wages (Lohn) are based on actual hours worked or units produced and can therefore fluctuate. In everyday language, "gross salary" and "gross wages" are now generally used synonymously.

Components of Gross Salary

Gross salary consists of various components:

Base Salary

The base salary forms the fixed, monthly consistent core of the gross salary. It compensates for the contractually agreed work performance and usually accounts for the largest portion.

Variable Salary Components

In addition to the base salary, the following components can increase the gross salary:

  • Overtime compensation
  • Bonuses and premiums (performance or success-based)
  • Commissions (e.g., in sales)
  • Supplements for night, Sunday, or holiday work
  • Holiday pay and Christmas bonuses

Benefits in Kind and Monetary Advantages

Non-monetary benefits also count toward the gross salary, such as:

  • Company car for private use
  • Job ticket (public transport pass)
  • Meal subsidies
  • Company pension scheme (employer contribution)

These benefits in kind must be taxed and subject to social security contributions – they therefore increase the gross amount from which deductions are calculated.

Deductions from Gross Salary

Two types of deductions are made from the gross salary: taxes and social security contributions.

Social Security Contributions 2025

Social security contributions are shared equally between employee and employer. The employee's share totals approximately 21% of the gross salary.

Insurance Total Contribution Employee Share
Health Insurance 14.6% + supplementary contribution (avg. 2.5%) 7.3% + approx. 1.25%
Pension Insurance 18.6% 9.3%
Long-term Care Insurance 3.4% 1.7% (childless persons over 23: 2.3%)
Unemployment Insurance 2.6% 1.3%

ontributions are only calculated up to the respective contribution assessment ceiling (Beitragsbemessungsgrenze). For health and long-term care insurance, this is €5,512.50 per month in 2025; for pension and unemployment insurance, it is €8,050.

Income Tax and Tax Classes

Income tax (Lohnsteuer) is a form of income tax that your employer remits directly to the tax office. The amount depends on your tax class:

  • Tax Class I: Single, divorced, widowed
  • Tax Class II: Single parents with children
  • Tax Class III: Married (higher income)
  • Tax Class IV: Married (equal income)
  • Tax Class V: Married (lower income)
  • Tax Class VI: Second or side job

The higher the income and the less favorable the tax class, the more income tax is deducted.

Church Tax and Solidarity Surcharge

Members of the Protestant or Catholic Church pay an additional 8% (Bavaria, Baden-Württemberg) or 9% (all other federal states) of their income tax as church tax.

The solidarity surcharge (5.5% of income tax) has been eliminated for most employees since 2021. It is only levied on annual gross incomes exceeding approximately €96,000 (single) or €192,000 (married).

Employer Gross: What Employees Really Cost

For HR professionals, the so-called employer gross (Arbeitgeberbrutto) is crucial alongside the gross salary. It includes all costs that an employer must incur for an employee.

The employer gross consists of:

  • Gross salary
  • Employer's share of social security (approx. 20-22%)
  • Levies (U1, U2, insolvency levy)
  • Accident insurance (paid entirely by the employer)

As a rule of thumb: The actual personnel costs are approximately 20-25% above the gross salary. For a gross salary of €4,000 per month, the company incurs total costs of approximately €4,800-5,000.

Calculating Gross Salary: Example Calculation

How much net remains from €4,000 gross? Here is an example calculation for a single person without children, Tax Class I, in North Rhine-Westphalia:

Gross Salary: €4,000.00

Employee Deductions:

Item Amount
Health Insurance (7.3% + 1.25% supplementary) -€342.00
Pension Insurance (9.3%) -€372.00
Long-term Care Insurance (2.3% childless) -€92.00
Unemployment Insurance (1.3%) -€52.00
Income Tax (Tax Class I) -approx. €473.00
Church Tax (9%, if member) -approx. €42.57
Total Deductions -€1,373.57

Net Salary: approx. €2,626.43

This corresponds to approximately 65.7% of the gross salary. Without church tax liability, it would be approximately €2,669 net (66.7%).

Frequently Asked Questions About Gross Salary

What is the difference between gross salary and net salary?

Gross salary is the total amount before all deductions – as stated in the employment contract. Net salary is the amount remaining after deduction of taxes and social security contributions, which is transferred to your account. The difference amounts to approximately 30-40% depending on individual circumstances.

What is deducted from the gross salary?

The following are deducted from the gross salary: income tax (depending on tax class and income), health insurance (approx. 8.5%), pension insurance (9.3%), long-term care insurance (1.7-2.3%), unemployment insurance (1.3%), and where applicable, church tax and solidarity surcharge.

How high are the social security contributions in 2025?

Total social security contributions amount to approximately 41.9% of the gross salary in 2025. Employees and employers each bear approximately half. The employee's share is around 21% of the gross wage.

What is the employer gross?

The employer gross refers to the total costs that an employer incurs for an employee. It includes the gross salary plus the employer's share of social security and other levies – approximately 20-22% in addition to the gross salary.

What is the contribution assessment ceiling?

The contribution assessment ceiling (Beitragsbemessungsgrenze) is an income limit up to which social security contributions are calculated. Income above this threshold is no longer subject to contributions. In 2025, it is €5,512.50 per month (health/long-term care insurance) or €8,050 per month (pension/unemployment insurance).

How does a salary increase affect net pay?

A gross increase does not result in an equally high net increase. Reason: Progressive taxation means that higher incomes are taxed at a higher percentage. Social security contributions also increase proportionally (up to the contribution assessment ceiling). Rule of thumb: Approximately 50-60% of a salary increase remains as net.

Which tax class applies to which marital status?

Single, divorced, and permanently separated persons receive Tax Class I. Single parents with children receive Tax Class II. Married couples can choose between combinations III/V or IV/IV – depending on how incomes are distributed.

How do I calculate net salary from gross salary?

For an accurate calculation, it is best to use a gross-net calculator (e.g., from AOK, Sparkasse, or Stiftung Warentest). These consider all individual factors such as tax class, federal state, number of children, and health insurance supplementary contribution.

Conclusion

Gross salary is the central figure in every employment relationship – for employees as a basis for comparison, for HR professionals as the foundation for personnel cost planning. The key understanding is: Approximately 30-40% of the gross goes to taxes and social security contributions, while employers bear an additional approximately 20-22% of the gross in ancillary wage costs.

For precise calculation in personnel planning, you should therefore always work with the employer gross – the actual cost factor per employee.

Would you like to learn more about modern HR topics? Discover more articles in the Aivy HR Blog or learn about objective aptitude diagnostics at aivy.app.

Sources

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About Florian

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  • Actively shapes the future of the working world — by combining science and technology for better and fairer personnel decisions

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