If you're married and living in Germany, your tax return is probably saving you money, or quietly working against you. The reason is a single rule called Ehegattensplitting, Germany's joint taxation system for married couples. Introduced in 1958, it allows couples to pool their income and be taxed as a unit, which can mean thousands of euros in annual savings. But this same system also creates real disadvantages for lower-earning partners who want to work more.
The idea is simple. The tax office takes what you and your spouse earn together, splits it down the middle, and taxes you as if you each earned that half. Because Germany taxes higher income at higher rates, this averaging trick is powerful when one partner earns a lot more than the other, it drags the big salary down into a cheaper bracket. This matters because Germany's income tax is progressive. Rates start at 14% on income above the tax-free allowance, climb to 42% above roughly €67,000, and hit 45% above €277,826. By averaging two unequal incomes, splitting pulls the higher earner down into a lower bracket.
Take a concrete example. One spouse earns €70,000 and the other €28,000. Without splitting, the higher earner gets taxed heavily in the upper brackets. With splitting, both are effectively taxed as though they each earned €49,000, comfortably below the 42% threshold. The savings are even larger for single-earner couples. If one partner earns €80,000 and the other earns nothing, that full amount would normally hit the 42% bracket hard. With splitting, it's treated as two lots of €40,000, each taxed at a much lower rate.
In 2026, the basic tax-free allowance is €12,348 per person, doubled to €24,696 for joint filers, meaning the first €24,696 of combined income is completely tax-free.
Married couples choose a tax-class combination that determines monthly withholding from each salary. Class III/V suits unequal incomes, the higher earner in Class III has very little withheld, while the lower earner in Class V has a high withholding rate. Class IV/IV splits withholding evenly for similar incomes. There's also Class IV/IV with a factor method, which distributes withholding based on each partner's actual income share.
The critical point: the tax class only affects your monthly pay cheque, not your annual tax bill. Regardless of which combination you choose, the total tax owed at year-end is identical. The class is a cash-flow decision, not a tax decision.
The bigger the income gap between partners, the bigger the savings. Single-earner households see the greatest advantage. A couple where one spouse earns €80,000 and the other earns nothing will save far more than a couple who each earn €40,000. If both partners earn roughly the same, the benefit is zero. If neither has taxable income, there is nothing to split.
The system is backed by Article 6 of Germany's Basic Law, which protects marriage and family. Same-sex married couples and converted civil partnerships qualify on equal terms. You can choose between joint and separate assessment every year, so revisit the decision annually.
Here's the catch. The same rule that rewards a big income gap also punishes the lower earner for trying to close it. Pick up extra hours, and the splitting advantage shrinks. Much of your additional gross pay gets swallowed by higher marginal taxes, leaving very little extra in your pocket.
Why? Because splitting puts both partners on the same marginal tax rate. If your spouse is in the 42% bracket, your extra income gets taxed at 42% too, even if you're only earning a few hundred euros a month beyond a mini-job. That's far above the 14% rate you'd normally start at. The OECD ranks Germany third-highest among advanced economies for marginal tax rates on secondary earners.
A March 2026 Bertelsmann Foundation study, conducted by the DIW Berlin with 3,788 women aged 45 to 66, found that 50% of married part-time women said increasing their hours simply wasn't worth it financially. The study estimated that switching to individual taxation could create 175,000 additional full-time jobs in this age group alone.
According to 2021 data from the Bertelsmann Foundation and ifo Institut, of Germany's 7.6 million married women of working age, around 6 million earn less than their husbands, and for them, fewer hours also means lower pensions and greater financial dependence.
Joint taxation has faced growing criticism from economists, international organisations, and gender equality advocates who argue it belongs to a different era. The OECD has recommended Germany abolish it. The European Commission has flagged it as a barrier to women's employment. And the March 2026 Bertelsmann study put hard numbers behind the argument, 175,000 potential jobs being left on the table.
Yet politically, the system has powerful defenders. Klaus Holetschek, CSU parliamentary leader in Bavaria, has called it a constitutionally sound foundation and warned that scrapping it simply means higher taxes on families. Gordon Schnieder, CDU state chairman in Rhineland-Palatinate, ruled out any additional burden on married couples.
But even within the conservative camp, cracks are forming. CDU Family Minister Karin Prien wants to reshape the system so that tax benefits are tied to having children rather than simply being married. According to the DIW, eliminating joint taxation entirely would generate €20 to €25 billion in additional annual tax revenue. Other researchers propose a compromise: couples would file individually but could transfer a limited tax deduction to each other, reflecting real financial obligations between spouses.
The Bertelsmann study also stressed that tax reform alone won't solve the problem, equal sharing of care work between partners and genuinely flexible working conditions matter just as much.
If your household has one main earner, Joint taxation saves you real money. If you both earn similar amounts, it makes no difference. And if the lower-earning partner wants to work more, run the numbers carefully: the short-term savings may cost that partner far more in lost career growth and retirement security down the road.
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