Germany is the Europe’s biggest economy and one of the richest countries in Europe. It is wealthy not only in GDP per capita terms but also in terms of average personal income. The country is famous for its affluent middle class, generous welfare system, free healthcare and education, clean environment, public safety and generally fair and even distribution of wealth. Therefore, Germany is also highly regarded for its great quality of life.
Average Gross Salary in Germany
An average gross salary for full time employees in Germany in H1 2022 was ca 4,250 euros a month incl. bonuses according to the StepStone Gehaltsreport 2022. Self-employed, part-time jobbers and people with very low income below the taxable level were not included in these statistics. That translates into 51,009 euros a year gross (before income tax and social contributions).
When discussing salaries, make sure you understand the difference between average and median. In this report, medians rather than averages are used. In fact, the median values are less affected by extraordinarily high values and, therefore, provide a better representation of the income of the average person within a certain category. So, the median gross salary in Germany in H1 2022 was 44,074 euros as opposed to the above mentioned average of 51,009 euros. The minimum wage in Germany is currently just above 1,800 euros a month (10.45 euros an hour as of July 1st, 2022) which is ca 21,700 euros a year. Yet, the minimum wage is set to increase to 12 euros an hour as of October 1st 2022.
Major differences in income levels still exist between the East and the West. The median salary in the old federal states (45,292 euros a year) is about 28% (or 823 euros a month) above the median in the new states (35,416 euros a year). That is, employees in the former East Germany earn on average around 2,950 euros a month (excluding the city state Berlin because Berlin is not considered one of the new federal states). Employees in the southern federal states – Hessen (capital Wiesbaden), Baden-Württemberg (Stuttgart) and Bayern (Munich) – have the highest median wages whereas those in the new states – Mecklenburg-Vorpommern (capital Schwerin), Brandenburg (Potsdam) and Sachsen-Anhalt (Magdeburg) – have the lowest salaries. In fact, employees in the federal state Hessen earn on average 39% more than their counterparts in Mecklenburg-Vorpommern.
Furthermore, German men earn on average nearly 17% more than women. There are also differences in income levels between the regional capitals (and large cities in general) and rural areas but these are less significant than differences between men and women or between the old and new federal states. The biggest difference is in Bayern (the federal state of Bavaria) where the median salary in the capital Munich is 53,886 euros a year against the state’s median of 46,800 euros, that is, 15% above the state’s level. In fact, Munich is the city with the highest salaries in Germany.
Average Salaries in Germany in 2022 by Profession
|Who earns how much||Euros a year|
|Head of marketing||81K|
|IT project manager||73K|
|Social media manager||40K|
|Waiter (tips not included)||29K|
|Call center operator||28K|
Personal Income Tax
Germany has a rather complicated taxation system and personal income taxation is no exception. There is a progressive personal income tax rate starting from zero and ending at 45% for high-income individuals earning more than 277.8 thousand euros a year. The tax rates 42% and 45% are flat within their respective brackets whereas within the 10,348-58,596 euro bracket the tax rate rises geometrically from 14% to 42% (see below).
Personal Income Tax Rates in Germany for 2022
|Singles (EUR)||Married Couples (EUR)||Tax Rate|
|0 – 10,347||0 – 20,694||0%|
|10,348 – 58,596||20,695 – 117,192||Starting at 14% and geometrically increasing to 42%|
|58,597 – 277,825||117,193 – 555,650||42%|
|277,826 and above||555,651 and above||45%|
Please note that the brackets for tax rates have already changed once in 2022 due to raising the tax free allowance to reflect the growing inflation and this may not be the last change this year.
There is also an additional type of income tax, the so-called solidarity surcharge, equaling max. 5.5% of income tax, which comes on top of the regular income tax but it is only paid in full by high-income individuals. For example, in 2022, a single person with no kids who pays less than 16,956 euros a year in taxes (i.e., earning less than 73.9K euros annually) is exempt from the solidarity surcharge while for a single individual who earns between 73.9K and 109.5K euros annually the solidarity surcharge increases geometrically from zero to 5.5%. Finally, anyone single with no kids who earns more than 109.5K euros a year pays the full 5.5% surcharge. The solidarity tax was introduced in 1991 as a temporary measure to help finance the costs of German unification and, in order to remain true to its temporary status, it was dramatically reduced at the beginning of 2021.
Moreover, a church tax, which is either 8% or 9% (depending on the federal state) of income tax, is payable by all registered church members in Germany. To confuse you even more, the amount paid as church tax is fully tax deductible (nonetheless, it will still reduce your disposable income). A foreigner who does not wish to pay a church tax in Germany should never mention their church affiliation in any official document (e.g., in residence registration). Otherwise, Roman Catholics and Protestants will most likely need a written proof (a certificate) that they quit the church in order to avoid paying the German church tax.
The German personal income tax law allows for a number of tax deductions, both related and unrelated to taxable income, such as training and commuting expenses, dual household costs, work-related insurance costs, contributions to voluntary health insurance and pension schemes, church tax and a variety of expenses related to bringing up children (e.g., childcare, school fees).
Personal Income Tax Calculation: Examples
This example may give you an idea of how much you would have to pay in taxes and social contributions if you lived in Germany. In 2022, a person who has a median German gross salary of 44 thousand euros per year, is single and is not a registered church member (pays no church tax) earns a net salary of less than 29 thousand euros per year. However, if that person had a spouse who earned significantly less, their net salary would be over 32 thousand euros a year (i.e., ca 3.5K euros more). Using the same example but a gross annual salary of 60 thousand euros, the person’s net income would be just under 37 thousand and well over 41 thousand euros, respectively (i.e., a difference of 4.7K euros). Likewise, at 80 thousand euros a year the difference in net salary would be 47 thousand versus 54 thousand euros (i.e., 6.9K euros). To estimate your potential net salary you can try one of many German gross-net wage calculators available on the internet (e.g., this one).
Cost of Living in Germany
Germany’s price level is generally in line with the EU average. That is, life in Germany is less expensive than in the neighbouring Luxemburg, Switzerland, Denmark, Belgium and even France and Netherlands, or in the Nordic states (Norway, Sweden and Finland), but it is more costly than in Spain, Portugal or Greece. In 2022, the monthly living costs in Germany are estimated at around 1,000 euros if sharing a flat (renting a flat on your own will push them well over 1,000 euros), and at 930 euros for university students and a little less for trainees in vocational training. This is approximately the monthly amount you will need to prove you have for the duration of your stay when applying for a certain type of visa. To be absolutely precise, as of 2022, you will need to have 934 euros a month at your disposal when applying for a study visa or a jobseeker’s visa and 832 euros a month when applying for a visa for vocational training.
Rent is the single biggest cost, which is not surprising considering the density of population in Germany. Home ownership in Germany has been traditionally relatively low as most people used to live in rental apartments. This has changed recently as many Germans fearing instability of their currency and encouraged by low interest rates bought properties. In addition, Germany has experienced a sharp increase in net immigration since 2010 which has led to an increased demand for properties. As a result, property prices have seen a steady growth over the past twelve years. The rents have risen less than property prices so far but are expected to start growing faster in line with increasing interest rates.
However, rents vary wildly depending on the location. A small studio flat can cost as little as 450 euros a month including utility bills (except for electricity, which is usually paid extra) in a small town but well over 1,000 euros in central Munich. Likewise, rent for a two bedroom apartment can be as low as 700 euros a month (including utilities) but as high as 2,000 euros. Generally, 750 euros a month should be enough money to rent a studio flat (including utility bills) and 1,300 euros a month to rent a mid-sized two bedroom flat (up to 85 square metres) in a decent location in most parts of Germany.
But, let’s do some simple maths. Currently, the average apartment rent in Germany is 10 euros a month per square meter excluding utilities. This is the so-called ‘Kaltmiete’. However, in Munich (the most expensive town in Germany) it is rather around 19 euros a month. For ‘Warmmiete’, factor in additional 2.50 euros per square meter for utility costs and other expenses. On top of that add some 40-60 euros a month for electricity. Using these assumptions, an average flat in Germany (the average size is 68 square meters) will cost you around 900 euros a month to rent. Please note that the typical size of a studio in Germany is 30-45 square meters while the average two bedroom apartment has 65-90 square meters.
To get a better view on the variation in rents and prices of residential properties throughout Germany, download and read the ‘Residential Report Deutschland‘ from BNP Paribas (dated March 10, 2022). It contains detailed information on the residential property market in 13 major German cities as well as summary data for 110 other German towns.
Security Deposit and Compensation Fee
When renting a flat, it is necessary to factor in further expenses other than simple rent. A tenant will be typically asked for a security deposit (usually worth one month’s rent but it can be up to three months) and a broker fee equal to one month’s rent if they use a real estate agent. In addition, rent is usually paid in advance (always at the beginning of each month) and it is not uncommon to be asked to pay Ablöse (compensation for investments made by the previous tenant). This can be up to several thousand euros if the previous tenant made significant improvements in the flat. Hence, the new tenant pays Ablöse to the outgoing tenant rather than to the landlord. It is common that tenants make small improvements in the rented apartment such as installing lighting and buying their own furniture (sometimes even the whole kitchen including a cooker, fridge, dishwasher and sink).
Just like rents, German property prices vary significantly between regions and towns. For example, in August 2022, the average apartment price per square meter in the formerly heavy-industrial Dortmund (the eighth largest German city with a population of 600 thousand located in Western Germany) was around 3,300 euros. Compare this with nearly 10,000 euros per square meter in notoriously expensive Munich (the capital of the southern federal state of Bavaria and the third largest German town with a population of 1.5 million). It goes without saying that a new or newly renovated apartment in one of Munich’s prime locations will cost you a lot more than 10,000 euros per square meter. As of Q2 2022, the average price per square meter to buy an apartment in Germany was just under 3,500 euros. Thus, 3,500 euros per square meter should buy a decent apartment in most parts of Germany with the exception of the largest and the most expensive cities like Munich, Frankfurt, Hamburg, Stuttgart or Berlin.
Germany’s public transportation system in and around towns is extremely reliable, efficient and reasonably priced, especially if you buy discounted monthly, quarterly or yearly travel cards. Commuting costs are tax deductible and that is also true when using one’s own car. When doing a tax return, people driving their own car to work can deduct 30-38 cent per kilometre whereas one litre of gasoline and diesel cost around 1.70 and 1.95 euros, respectively (as of August 2022). Used cars in Germany are among the least expensive in Europe.
Food, Clothing and Other Costs
Your monthly expenses on food will largely depend on your lifestyle, whether you like eating out or making your own meals. In general, food prices in supermarkets are very reasonable in Germany. In addition, large German employers offer meals at a reduced price in their own canteens. Likewise, clothes can be bought very cheap in Germany. However, some foreigners may find prices of certain services such as private childcare, dry cleaners, hairdressers or residential parking quite high when compared with prices in their home country.
Check out these helpful resources for cost of living in Germany (rents, prices of goods and services) and for international and regional comparisons:
Salaries vs Cost of Living in Germany
- A single person on minimum wage will bring home 1,330 euros a month which is 330 euros above the average monthly cost of living in Germany.
- A single person earning the German average salary of 4,250 euros a month makes 2,680 euros netto which is more than two and a half times the average cost of living.
- A single nurse earning the average gross salary for a nurse in Germany of 3,400 euros a month makes at least 2,240 euros netto which is 1,240 euros above the average cost of living for a single person.
- A general practitioner (family doctor) having the average gross salary in his branch of 7,500 euros a month earns 4,330 euros after tax and that is well over four times the average cost of living in Germany.
These are just a few examples to illustrate what some German salaries are really worth. When doing your own comparisons do not forget that the average cost of living in Germany varies mainly due to differences in rent so that the same salary will buy you significantly less in fancy places like Munich than in less affluent parts of Germany.