Annual wage tax adjustment

The Lohnsteuerjahresausgleich (annual wage tax adjustment) is an automatic tax correction carried out by your employer in December.

When it gives money back:

• Your salary changed during the year (pay rise from July)
• You received special payments (Christmas bonus, bonus)
• You were temporarily on short-time work or parental leave

What happens: the employer recalculates the wage tax for the entire year – based on your actual total earnings. If too much was withheld, you get the difference paid out with your December salary.

Not to be confused with: the income tax return! The annual wage tax adjustment is automatic and only concerns wage tax. For income-related expenses, special expenses etc. you also have to file a tax return.