German severance net calculator — with Fünftelregelung
Free calculator for the net amount of a German severance after income tax, solidarity surcharge and church tax, including the one-fifth rule (§ 34 EStG). Standard-case orientation, not a binding tax computation.
A German severance payment typically leaves 55–70 % as net after tax, depending on annual income, severance size, filing status and church-tax membership. Severance is subject to income tax (§ 24 Nr. 1 EStG) but exempt from social-security contributions. The one-fifth rule (Fünftelregelung, § 34 EStG) softens the progression and typically saves €500 to several thousand euro. Since 2025 the one-fifth rule must be claimed in the annual income-tax return — the employer no longer applies it automatically through payroll.
Annual gross in the year the severance is paid.
Based on the standard 2025 German income-tax tariff. For a binding figure, consult a tax adviser — see disclaimer below.
How the calculator produces the net figure
- Regular income tax on annual income without severance — § 32a EStG, 5-zone tariff (basic allowance, two progression zones, 42 % top rate, 45 % reichensteuer).
- One-fifth rule (§ 34 EStG): tax on the severance is computed as
5 × (Tax(zvE + severance/5) − Tax(zvE)), flattening progression. - Solidarity surcharge: 5.5 % on income tax, only above the threshold (§ 3 SolzG). Below: nothing. In the smoothing zone: a lower, linearly-interpolated amount.
- Church tax: 8 % (BY, BW) or 9 % (rest), applied to the income tax. Zero if not a church member.
- Net severance = Gross severance − (income tax + Soli + church tax). No social-security contributions apply to severance payments (§ 14 SGB IV).
When the one-fifth rule applies — and when it doesn't
The Fünftelregelung is a tax relief for extraordinary one-off income. Instead of pushing the full severance into the next tax bracket, only one-fifth is notionally added, the additional tax computed, and multiplied by five.
Requirements (settled BFH case law, e.g. VI R 29/14):
- Zusammenballung (bundling of income): severance + regular income > comparable income without the termination.
- Payment in a single tax year (cash-basis principle, § 11 EStG) — multi-year staggered payments typically forfeit the benefit.
- Nexus to employment termination (§ 24 Nr. 1 a EStG).
Since 2025 (Wachstumschancengesetz): the one-fifth rule is no longer applied automatically by the employer. Employees claim the relief in the annual tax return (Anlage N). Any excess wage tax withheld is refunded via the tax assessment.
Practice tip: when you receive severance, plan the tax return carefully for that year — business expenses from the termination year (relocation, professional literature, upskilling) further reduce zvE and raise the net amount.
Frequently asked questions
What stays net from a German severance payment?
German severance is subject to income tax but exempt from social-security contributions. Typically 55–70 % of the gross amount remains as net, depending on annual income, severance size, filing status (married-joint or single) and church tax. The one-fifth rule (§ 34 EStG) significantly reduces progression — in mid-income cases it saves several thousand euro.
How does the German one-fifth rule (Fünftelregelung) work?
The one-fifth rule under § 34 EStG softens progression on one-time payments like severance. The maths: one-fifth of the severance is notionally added to annual taxable income, the additional tax is computed, and multiplied by five. Formula: TaxWithFR = 5 × (Tax(zvE + severance/5) − Tax(zvE)). This flattens the progression curve.
Does the employer apply the one-fifth rule automatically?
Not since 2025. Through 2024, employers applied the Fünftelregelung directly in payroll. Under the Wachstumschancengesetz (effective 2025), employees must claim the one-fifth rule themselves in the annual income-tax return (Anlage N). The employer withholds regular wage tax; any overpayment is refunded via the tax assessment.
What preconditions must the one-fifth rule meet?
The key criterion is "Zusammenballung" (bundling of income): the severance plus regular income in the payment year must exceed the comparable income without the termination. Payment must happen in a single tax year (cash-basis principle, § 11 EStG). Splitting the payment over multiple years typically forfeits the one-fifth benefit.
Does severance trigger the solidarity surcharge (Soli)?
Only above a free-amount threshold (§ 3 SolzG). For single filers the Soli applies when annual income tax exceeds roughly €19,950; for joint filing roughly €39,900. Between the threshold and the full-rate zone a smoothing applies; above, the full 5.5 % on income tax applies.
How does church tax affect the net?
Church tax (Kirchensteuer) is a surcharge on income tax: 8 % in Bavaria and Baden-Württemberg, 9 % in all other federal states. Non-members pay zero. Leaving the church before severance inflow eliminates the surcharge on the severance — the exit must be registered before the actual payment date.
Is this calculator legally binding?
No. The result is a first-orientation estimate based on the standard 2025 tax tariff (§ 32a EStG). The actual tax liability depends on additional factors not captured here: business expenses, extraordinary deductions, Progressionsvorbehalt (unemployment benefit, parental allowance, sick benefit), additional income (capital, rental), and the precise cash-flow year. For a binding figure consult a tax adviser.
Not tax advice — orientation only
This calculator provides a non-binding first orientation based on the current German income-tax tariff. It does not constitute tax advice and does not replace it.
The actual tax liability depends on factors not captured here: business expenses, extraordinary deductions, Progressionsvorbehalt (unemployment benefit, parental allowance, sick pay), additional income (capital, rental, side jobs), the precise cash-flow year, the Zusammenballung requirement and loss carry-forwards.
For the binding tax computation the responsible authority is the Finanzamt; for tax structuring, a Steuerberater (tax adviser). APOS Legal advises on the employment-law side of severance; the tax structuring is best coordinated with your tax adviser.
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What happens next?
After your enquiry we review the details and reply with an initial assessment — whether the dismissal can be challenged, how high a likely severance could be and which next steps make sense.
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