Income Tax
The gross income is taxed in Germany. The level of taxation depends on the size of the gross income (progressive tax). It also depends on the family status of the employee. There are six "tax classes" (I-VI). The tax class applicable depends on whether a person is married, has children or has a "second form of income". If a household contains two partners who are both working, the combination of tax classes may offer large benefits. The tax classes and status of family, children, etc, are listed on the tax card, which is obtained from the local authorities ("Stadtverwaltung").
The tax card is given to the employer who writes in the yearly income and other factors at the end of the year. The taxes are deducted automatically from the gross monthly income. At the end of the year employees must make a tax declaration ("Lohnsteuerjahresausgleich") and hand in the tax card to the tax authorities. All sources of income (e.g. rent and interest) that a person had in the previous year are then added up and added to the taxes paid. In addition there are many "tax-free allowances" ("Freibeträge") and possibilities to make tax "deductions". In some cases, people get money refunded from the finance office at the end of the year.
Because the German tax system is complicated, it can be worthwhile getting advice from an income tax association ("Lohnsteuerverein") or a tax consultant. The finance offices are also obliged to provide information.
You can receive more detailed information from your local finance office or a tax consultant, as well as online at 
www.finanzamt.de. The finance ministry also publishes a brochure, "Steuern von A bis Z", which can be downloaded at www.bundesfinanzministerium.de.
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