How do I calculate the payroll manually

Wage calculation

General information on wage calculation

A wage calculation is indispensable because the gross wage does not represent the sum of the salary that is actually paid at the end of the month.
Basically, two items are deducted from the gross wage: on the one hand, there are taxes and, on the other hand, social contributions.

However, both items have a few sub-items. Specifically, the following taxes are deducted from the gross salary:

The insurance premiums depend on the respective gross salary. The easiest way to calculate this and find out your net salary is to use a salary calculator.

Wage calculation: tax brackets & allowances

If you want to calculate your actual net wage, you will spend most of the time calculating the wage tax. This is significantly influenced by the tax brackets and the tax exemptions.

The amount of the tax is largely determined by the tax class. This overview briefly illustrates which tax class is suitable for whom.

Tax class 1Usually you are in tax class 1 and have a basic tax credit of 9,744 euros, as of 2021. This applies to single, separated, widowed persons and pensioners.
Tax class 2Only single parents or persons living apart who receive child benefit are classified in this tax bracket.
Tax class 3The cheapest tax class is number 3, because this grants the highest basic tax allowance. However, it is only available to married people. Conversely, however, the partner must choose tax class 5.
Tax class 4In tax bracket 4 are married couples who earn roughly the same amount. The tax class behaves in the same way for tax purposes as tax class 1.
Tax class 5This is the worst tax bracket and is only worthwhile for married couples with different incomes. The partner who earns more, on the other hand, chooses tax class 3, in which the taxes are lowest.
Tax class 6Tax class 6 is only required if an employee takes up a second or further job in addition to his main job.

Tax allowances are to relieve the taxpayer. This applies, for example, to people who have a low income or to single parents, pensioners, students or people with disabilities or people who do charitable work.
Depending on the type of tax and life situation, the taxpayer can claim different allowances. Three exemptions are most commonly used:

Other allowances that can be obtained and which reduce wage tax accordingly are the trade tax allowance and support for single parents. You only get the latter if you qualify for tax class 2.

Calculating wages without tools is very complicated. A wage calculator that can determine the net salary is therefore the right decision for the calculation. If you ever want to roughly estimate how high the wage will be, you can use a common rule of thumb: The net salary is between 60 and 70 percent of the gross wage. In the case of low incomes it is closer to 70 percent, and in the case of high incomes closer to 60 percent.

  • Rough wage calculation:
    Net wage = between 60 and 70 percent of the gross wage

Non-wage costs

The employer also bears costs if he employs an employee. Non-wage costs are all money that an employer has to pay in addition to the regular salary. These actually make up a significant part of the cost of employing staff.

There are basically two different types:

  • statutory additional costs
  • operational costs

The statutory additional costs for wages include health insurance and social security contributions. The wage tax and the solidarity surcharge are not added. These funds are also paid by the employer, but are borne by the employee.

The additional operational costs that are incurred in addition to the regular salary can include different points. For example, these are

However, in contrast to the statutory ancillary costs, the employer can decide for himself whether or not he would like to bear the additional operating costs.
Contributions for company old-age and / or health insurance, which the employer pays, must also be included.
The actual amount of additional costs depends on the salary and is therefore difficult to generalize. Most of the time, however, they make up more than 21 percent of the gross salary.

46 percent of the total ancillary costs are due to legal obligations. 54 percent of the ancillary costs are therefore operational.

The employer's contribution to the ancillary costs for the salary / status: 2021

Post of additional costsPercentage of the employer
Pension insurance9,3
unemployment insurance1,20
Accident insuranceeach depending on the wage bill, risk class and apportionment rate
Health insurance7,3
care insurance1.525 (Attention: may vary depending on the state!)
Allocation for the bankruptcy money0,06

The most important facts about wage calculation

  • The wage calculation is important in order to find out how much net wages are actually being paid
  • The deductions that are deducted from gross wages can generally be divided into two categories: taxes and social security contributions
  • How high the taxes are ultimately depends on the tax class and the tax exemptions
  • The net wage is roughly 60 - 70% of the gross salary
  • The employer also has to bear the costs of employing an employee (non-wage costs)

Calculating wages: frequently asked questions

The tax class is decisive for the wage calculation. According to this, the amount of the tax is based. In addition, allowances must be taken into account, which are individually based on the life situation of the taxpayer. Therefore, a wage calculation must be carried out for each individual case. Roughly calculated, the net salary is 60 - 70 percent of the gross wage. The best way to get precise information about wages is our wage calculator.

As a rule, the following deductions are withheld from the gross salary:

  • income tax
  • Solidarity surcharge (5.5 percent of wage tax)
  • Church tax (optional)
  • Health insurance
  • care insurance
  • unemployment insurance
  • Pension insurance

The employer also pays taxes if he employs an employee. These are referred to as non-wage costs. A distinction is made between statutory ancillary costs (which are mandatory) and operational ancillary costs (which are voluntary for the employer). The additional costs that he has to bear for an employee are contributions to health, nursing care, accident, pension and unemployment insurance as well as the insolvency payment.

Individual evidence

  1. Federal Ministry of Justice and Consumer Protection: Income Tax Act →
  2. Federal Ministry of Justice and Consumer Protection: Inheritance Tax Act →
  3. Federal Ministry of Justice and Consumer Protection: Trade tax law →
  4. Federal Ministry of Finance: Tax relief for employees, families and single parents
  5. Federal Ministry for Family, Women, Seniors and Youth: Allowances for children
  6. Federal Ministry of Finance: Leaflet on tax class selection
  7. How much is the church tax?
  8. Techniker Krankenkasse: Contributions from January 1, 2017

Exclusion of liability: Despite careful examination, we assume no liability for the completeness, correctness or topicality of the information presented here. No services will be assumed that are reserved for professionals in accordance with the StBerG and RBerG.