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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 2022 was 4,427 euros a month incl. bonuses according to the StepStone Gehaltsreport 2023. Self-employed, part-time jobbers and people with very low income below the taxable level were not included in these statistics. That translates into 53,118 euros a year gross (before income tax and social security contributions).
When discussing salaries, make sure you understand the difference between arithmetic average and median. In this report, medians rather than arithmetic 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 2022 was 43,842 euros as opposed to the above mentioned average of 53,118 euros.
The minimum wage in Germany is currently 2,080 euros a month when working 40 hours a week (i.e., 12 euros an hour in effect throughout 2023) which is ca 24,960 euros a year. In the meantime, the government has approved an increase in the minimum wage to 12.41 euros an hour (2,150 euros a month) for January 1st, 2024 and a further increase to 12.82 euros an hour (2,220 euros a month) is planned for January 1st, 2025.
Major differences in income levels still exist between the East and the West. The median salary in the old federal states (45,461 euros a year) is nearly 18% (or 566 euros a month) above the median in the new states (38,670 euros a year). That is, employees in the former East Germany earn on average around 3,223 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 – Baden-Württemberg (capital Stuttgart), Hessen (Wiesbaden) and Bayern (Munich) – have the highest median wages (the city state Hamburg was excluded from these comparisons) whereas those in the new states – Sachsen-Anhalt (capital Magdeburg), Mecklenburg-Vorpommern (Schwerin) and Thüringen (Erfurt) – have the lowest salaries. In fact, employees in the federal state Baden-Württemberg earn on average 33% more than their counterparts in Sachsen-Anhalt.
Furthermore, German men earn on average 15% 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 53,595 euros a year against the state’s median of 46,757 euros, that is, 15% above the state’s level. In fact, Munich was in 2022 the city with the second highest salaries in Germany after Stuttgart.
Average Salaries in Germany in 2022 by Profession
|Who earns how much||Euros a year|
|Head of marketing||84K|
|IT project manager||75K|
|Social media manager||37K|
|Waiter (tips not included)||31K|
|Call center operator||29K|
|(source: StepStone.de, Gehalt.de)|
Income Taxes and Mandatory Contributions Payable by Individuals
Gross salary may differ quite substantially from net salary after taxes and social security contributions, especially for high income individuals. The major factors that affect mandatory charges include salary level, marital status and partner’s income, number of children, church affiliation and the federal state.
Social Security Contributions
Social security contributions make up 19.3% of gross income until a certain ceiling is reached. The ceilings are higher in West Germany and a little lower in East Germany to compensate for lower salary levels in the East. Out of those 19.3%, pension insurance accounts for 9.3%, health insurance for 7.3%, long-term care insurance for 1.5% and unemployment insurance for 1.2%. Social security contributions are deducted from the gross salary before calculating taxes. Moreover, employers contribute the same amount as employees, that is, 19.3%.
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 277,825 euros a year. The tax rates 42% and 45% are flat within their respective brackets whereas within the 10,909-62,809 euro bracket the tax rate rises geometrically from 14% to 42% (see below).
Personal Income Tax Rates in Germany as of April 1st, 2023
|Singles (EUR)||Married Couples (EUR)||Tax Rate|
|0 – 10,908||0 – 21,816||0%|
|10,909 – 62,809||21,817 – 125,618||Starting at 14% and geometrically increasing to 42%|
|62,810 – 277,825||125,619 – 555,650||42%|
|277,826 and above||555,651 and above||45%|
Please note that the brackets for tax rates changed on April 1st, 2023 due to raising the tax free allowance to reflect the growing inflation while further changes have been preapproved for 2024.
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, for 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 security contributions if you lived in Germany. In 2023, 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 just under 29 thousand euros per year. However, if that person had a spouse who earned significantly less, their net salary would be well 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 a bit over 37 thousand and nearly 42 thousand euros, respectively (i.e., a difference of 4.5K euros). Likewise, at 80 thousand euros a year the difference in net salary would be 48 thousand versus well over 54 thousand euros (i.e., 6.5K 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 Q4 2022, the monthly living costs in Germany were estimated at around 1,050 euros if sharing a flat (renting a flat on your own would push them well over 1,050 euros), and at 930 euros for university students and a little less for trainees in vocational training programmes. 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 January 1st, 2023, you will need to have 934 euros a month at your disposal when applying for a study visa or a jobseeker’s visa and 903 euros a month when applying for a visa for vocational training.
Rent is the single biggest cost of living, 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 latest ‘Residential Report Germany‘ from BNP Paribas published in March 2023. It contains detailed information on the residential property market in 11 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 March 2023, 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 2,900 euros. Compare this with ca 10,700 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 10,700 euros per square meter. As of Q4 2022, the average price per square meter to buy an apartment in Germany was just under 3,400 euros. Thus, 3,400 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, Dusseldorf 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 1.80 and 1.74 euros, respectively (as of November 20th, 2023). 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 working 40 hours a week will bring home 1,510 euros a month which is 460 euros above the average monthly cost of living in Germany.
- A single person earning the German average salary of 4,427 euros a month makes 2,813 euros netto which is considerably more than two and a half times the average cost of living. Using the median German salary of 3,654 euros a month instead results in net salary of 2,400 euros a month which is nearly 2.3 times the 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 2,260 euros netto which is 1,210 euros above the average cost of living for a single person.
- A general practitioner (family doctor) who is single having the average gross salary in his branch of 7,820 euros a month earns 4,570 euros after tax and that is more than 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.
Salaries & Cost of Living FAQs
Is life expensive in Germany?
Germany is relatively inexpensive when compared to most other countries in Western Europe such as Belgium, Luxembourg, Switzerland, France, Netherlands, the Nordics or the UK. Life in Germany is, however, a little more expensive than in Spain, Portugal or Greece.
Is it cheaper to live in Germany or the UK?
In general, it is cheaper to live in Germany though you can find many places in Germany that are more expensive than the UK average.
Is it less expensive to live in Germany or Switzerland?
Germany is certainly less expensive than Switzerland. In fact, Switzerland is one of the most expensive countries not just in Europe but in the whole world and thus hard to beat when it comes to cost of living.
Does it cost more to live in Germany or France?
Germany is on average a little less expensive than France but differences are not too significant. Therefore, you will find enough things and places in France that are cheaper than in the average German town.
What are the Germany’s wealthiest cities?
Major German cities that belong to the top 5 most affluent metropolitan areas in Germany include Frankfurt, Munich, Stuttgart, Düsseldorf and Hamburg.
What is the average German salary?
The average salary in Germany in 2022 was 4,427 euros a month (53K euros annually) according to StespStone. However, when discussing average salaries, median values are usually used rather than arithmetic averages. The median German salary for the same period was 3,654 euros (44K euros annually).
How much should I earn to live comfortably in Germany?
Many people in Germany can live comfortably on the minimum wage provided they do not need to make major savings or investments. This is especially true in small towns. A single person on a minimum wage working full time earns around 1,500 euros a month netto (as of 2023) which is well above the average cost of living of 1,050 euros a month.
What is the highest paying job in Germany?
The highest paying job in Germany appears to be a medical doctor who in 2022 earned on average 94K euros gross (i.e., median salary).
Is 55,000 euros a year a good salary in Germany?
Yes, it is as it is more than the national median salary for 2022, which was 44K euros a year while the national average was 53K euros. It is even more than the median salary in Stuttgart (54K euros a year), which was in 2022, according to the latest report by StepStone, the German city with the highest average salaries.
Is 1,500 euros a month enough in Germany?
In 2023, 1,500 euros a month happens to be the net salary of a single person having a minimum wage and working full time, that is, 40 hours a week. So, it should be enough money for most people to get by.
What is the cost of living in Germany?
The average cost of living in Germany is estimated at 1,050 euros per month as of Q4 2022. This amount of money is needed to cover the most basic monthly expenses but most Germans spend significantly more than 1,050 euros a month. Keep in mind that someone who works full time on minimum wage makes a net salary of about 1,500 euros.
Which major German city has the lowest cost of living?
Generally, cities in East Germany (e.g., Halle or Frankfurt an der Oder) tend to be less expensive than those in the western part of the country. Among major towns in West Germany, Dortmund and Bielefeld appear to be most affordable.
Do foreigners pay taxes in Germany?
Yes, sure. Anyone who is a resident in Germany pays income taxes from their worldwide income.
Is the income tax high in Germany?
Germany has some of the highest taxes among all OECD countries. The personal income tax structure is progressive while the highest tax rate levied on incomes over 277,825 euros a year is 45%. Mandatory social insurance contributions are at 19.3% also comparatively high and further contribute to the impression of high taxation.
How much in taxes will I have to pay in Germany?
This will largely depend on your income, marital status and your partner’s income, number of kids, church membership and the federal state you live in. Germany has a progressive tax rate structure for personal incomes, starting at 0% and ending at 45% for annual incomes over 278K euros. But, before calculating the taxes, mandatory social security contributions amounting to 19.3% of gross income are made. Furthermore, some individuals, depending on their income and church membership, must also pay solidarity surcharge (max. 5.5% of income tax) and church tax (8-9% of income tax).
How much of salary is tax-free in Germany?
For 2023, a personal income of up to 10,908 euros a year is tax-free in Germany.
How much is 100,000 euros after tax in Germany?
In 2023, a single person who has no kids and no church affiliation and is earning 100K euros annually should make ca 58K euros after taxes and social security contributions.
Do Germans buy or rent?
In the past most Germans used to live in rented properties. Renting a flat was thought to allow for more freedom and less care. But in the past ten or so years many Germans have been lured into buying their own properties by extremely low mortgage rates and continuously growing property prices. So, now it is about 50/50.
What is the average rent in Germany?
A studio flat will cost you on average 750 euros a month (utility bills included) while a two-bedroom flat should be in most German towns available at around 1,300 euros a month.
Is healthcare free in Germany?
Yes, it may feel kind of free as patients typically pay nothing when they go to see the doctor, provided the doctor has a contract with their statutory health insurer. This is because everyone living in Germany must either make statutory health insurance contributions themselves or the state makes them on their behalf (e.g., for children, students, pensioners, unemployed persons, refugees, etc.).
Is education in Germany free?
Yes, education at public schools and public universities in Germany is free of charge for all, Germans and foreigners alike. The only exception are the public universities in the federal state of Baden-Württemberg that charge tuition fees to the non-EU citizens.
How much is a litre of petrol in Germany?
At the end of November 2023, the average price of gasoline in Germany was 1.80 euros per litre while diesel fuel cost around 1.74 euros per litre.