Tax progression

Tax progression means: the more you earn, the higher the tax rate on the NEXT euro – but NOT on your entire income (§32a EStG, German Income Tax Act).

The tax brackets 2026:

• 0%: up to €12,348 (basic allowance – completely tax-free)
• 14–24%: €12,349–17,799 (lower progression zone)
• 24–42%: €17,800–69,878 (upper progression zone)
• 42%: €69,879–277,825 (top tax rate)
• 45%: from €277,826 ("wealth tax rate")

Why the "tax jump" is a myth:

Example: you earn €68,000 and get a €2,000 raise to €70,000.

• WRONG: "Now I pay 42% on everything = less net than before"
• RIGHT: only the €1,520 above €69,878 is taxed at 42%. The rest stays the same
• Result: of the €2,000 raise you keep approx. €1,160 net – ALWAYS a plus

Marginal tax rate vs. average tax rate:

• At €30,000: marginal tax rate 28.4%, but average only 14.3%
• At €69,879: marginal tax rate 42%, but average only 26.1%
• At €80,000: average approx. 27.6% – NOT 42%!

There is NO point at which one more euro of income leads to less net pay. The progressive rate rises smoothly – never in jumps.