Spousal income splitting
Ehegattensplitting (spousal income splitting) is a tax calculation method in Germany for married couples and registered civil partnerships that saves tax, especially when incomes differ.
How does it work?
• Both incomes are added together
• The total is divided by 2 (split)
• The tax rate is applied to this half
• The resulting tax is multiplied by 2
Who benefits most?
• Maximum advantage: one partner earns everything, the other nothing → up to €16,000 savings per year
• Big advantage: one partner earns €80,000, the other €20,000
• No advantage: both earn the same (e.g. €50,000 each) → splitting effect = €0
Tax class combinations:
• III/V: higher earner in III (low deductions), lower earner in V (high deductions). Higher monthly net pay for the main earner
• IV/IV: both the same. Makes sense with similar incomes
• IV/IV with factor: the most accurate monthly distribution
Criticism: spousal splitting costs the state approx. 25 billion euros a year. Critics say it creates disincentives for the second earner (usually the woman) to work.
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