Severance Pay Calculator Germany
Severance pay in Germany from monthly gross pay, years of service and a factor (usually 0.5), with estimated 2026 tax under the one-fifth rule and net payout.
Typical: 0.5 (standard severance per § 1a KSchG)
For fifth-rule calculation
Severance Pay (gross)
€20,000.00
Estimated tax
€7,025.00
35.1 % effective
Net severance
€12,975.00
Severance Calculation
The standard severance (0.5 monthly salaries per year) is a guideline from § 1a KSchG. The fifth-rule only applies to extraordinary income. Severance is exempt from social security. Only income tax, solidarity surcharge and possibly church tax apply. Simplified calculation without solidarity surcharge and church tax.
Note: These calculations are for informational purposes only and do not replace professional tax or financial advice. All information without guarantee.
FAQ
Frequently Asked Questions
How is a severance payment calculated?
The standard formula is half a gross monthly salary per year of service. For example, after 10 years with a 4,000 euro gross salary, the standard severance would be 20,000 euros.
How is severance taxed?
Severance payments are subject to income tax but not social insurance contributions. The "fifth rule" (Fuenftelregelung) can reduce the tax burden by spreading the tax effect over five years.
Why does the fifth rule barely reduce my tax?
The fifth rule (Fünftelregelung, § 34 EStG) only softens the tax progression – the higher your other income in the year of payment, the smaller the benefit. For a severance payment of 20,000 euros (4,000 euros × 10 years × 0.5) and 48,000 euros of other annual income, the calculator shows a saving of 553 euros; with 12,000 euros of other income it is 1,622 euros. If your other income is already in the top-rate bracket (2026: from 69,879 euros of taxable income), the rule brings no benefit at all. Since 2025, employers no longer apply the fifth rule when withholding wage tax; you only get the relief through your income tax return.
Guide
What is the Severance Pay Calculator Germany?
The severance pay calculator computes the tax burden on a severance payment using the one-fifth rule.
How does the Severance Pay Calculator Germany work?
Enter your annual salary and the severance amount. The one-fifth rule dampens tax progression: tax on one-fifth of the severance is calculated, multiplied by five and added to the regular tax. The calculator shows the effective tax burden.
Key Data and Facts
Rule of thumb for severance amount: 0.5 months's salary per year of service. The one-fifth rule mitigates tax progression — since 2025 only applied in the annual income tax return (no longer by the employer in payroll tax withholding). Severance payments are exempt from social security contributions.
Step-by-Step Guide
How to calculate the tax on a severance payment step by step: 1. Determine the severance amount: Rule of thumb: 0.5 gross monthly salaries per year of employment. With 10 years and EUR 4,000 gross: EUR 20,000. 2. Enter your annual gross income: Your regular income in the year of the severance (excluding the severance). 3. Apply the Fünftelregelung (one-fifth rule): Calculate the tax on regular income (Tax A). Calculate the tax on regular income + 1/5 of the severance (Tax B). The difference (Tax B - Tax A) x 5 = tax on the severance. 4. Determine the effective tax rate: tax on the severance / severance amount x 100. 5. Social security: Severance payments are exempt from social security contributions. 6. Optimization: Paying out in the following year can be more favorable if your income is lower then. A waiver of church tax on the severance can be applied for at the Finanzamt (tax office).
Calculation Example
Taxable income 45,000 EUR, severance 30,000 EUR (2026 tariff). Without the one-fifth rule: 11,529 EUR tax on the severance. With the one-fifth rule: 10,330 EUR. Saving: 1,199 EUR.
Sources
Official sources
Calculations are based on applicable German laws and official data:
Full methodology at Methodology.
Reviewed by Konstantin Iakovlev · Last updated:
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