What are the wage taxes for 2019

Tax changes 2019

In 2019 everyone will be relieved

Udo Reuss
Tax Expert As of March 21, 2019

Udo Reuss

The tax lawyer and business graduate Udo Reuß is responsible for tax issues at Finanztip. Before that, he worked for various business and specialist publishers such as Handelsblatt, F.A.Z.-Verlagsgruppe, Haufe-Lexware and Vogel Business Media - 14 years of which he worked as editor-in-chief of trade magazines. He draws the relevant judgments for tax savers from the complex tax law.

  • The basic allowance, child benefit and child allowance will be higher in 2019 than in the previous year, and the burden on employees and pensioners in health insurance will decrease. Compared to 2018, employees therefore have a noticeably higher net salary even without a wage increase.
  • With increasing income, the tax rate increases. In 2019, the tax authorities will adjust the tax rate to the rate of price increases. Therefore, a salary increase of almost two percent does not lead to a higher tax rate.
  • Since 2019, legislators have been promoting environmentally conscious driving to work more than ever. In this way, employers can grant or subsidize their employees with a tax-free job ticket for trains and buses.
  • The monetary benefit for a newly purchased electric company car is only taxed half as high as a company car with a combustion engine.
  • If you have to file a tax return, you now have more time. The general filing deadline for the 2018 tax return ends on July 31, 2019.
  • You can deduct slightly higher payments into the statutory pension insurance or into a Rürup contract as pension expenses with the special expenses.
  • If you receive a company bike in addition to your salary, you do not have to pay tax on the monetary benefit for private use.
  • If you, as an employee, want to benefit from the lower taxation of an electric company car, talk to your employer.
  • In order to use some tax changes to your advantage, you have to provide the corresponding information in the tax return - this applies, for example, to maintenance payers.

In 2019, employees receive income even without a wage increase higher net salary than last year. This is due to some tax relief like the higher basic tax allowance. Some social security contributions have also been reduced. The long-term care insurance contribution, on the other hand, has risen.

What will change in income tax 2019?

The basic tax-free amount is increased by 168 euros to 9,168 euros. Up to this amount, the taxable income remains tax-free. Married couples taxed together benefit from double the basic tax-free amount, that is 18,336 euros in 2019. In 2020, the basic tax-free amount will be increased even more: to 9,408 euros or 18,816 euros. All taxpayers benefit from the increased basic tax allowance.

This also applies to the changes in income tax, referred to by experts as a tariff shift. With this, the tax authorities want the consequences of the so-called cold progression balance. Because the principle of efficiency and therefore a tax progression applies to taxation: the higher the income, the higher the tax rate.

However, inflation causes the value of money to decline, which many employers compensate for with higher wages. If the wage only increases by the rate of price increase, the net wage could be lower due to a higher tax deduction. This is what tax experts call cold progression.

The tax authorities are trying to mitigate this. For 2019, he incorporated an inflation rate of 1.84 percent (2020: 1.95 percent) into the income tax rate. As a result, the benchmarks increase somewhat: a higher tax rate therefore only takes effect if the income is higher.

In fact, if the income remains the same, the tax rate drops slightly for everyone. The top tax rate of 42 percent applies to single people with a taxable annual income of 55,961 euros (2018: already 54,950 euros), the maximum tax rate of 45 percent from 265,327 euros (2018: from 260,533 euros). For married couples and registered partners who can be invested together, double the amounts apply.

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How are families relieved?

The Family Relief Act will bring parents improvements in child benefit and child allowance in 2019 and 2020. Fathers and mothers benefit from either one or the other service.

Child benefit - The child benefit increases by 10 euros per month for each child - but first in July 2019. For the first and second child it is then 204 euros. For the third child there is 210 euros and from the fourth child 235 euros.

Child allowance - The part of the child allowance, which is intended to secure the child's subsistence level, increases 2019 for 96 euros for each parent, so a total of 192 euros for both parents. The tax exemption for childcare and upbringing or training needs of 1,320 euros per child and parent has remained the same, so that a couple of parents have a total child tax allowance of 7,620 euros in 2019.

For most parents, it is cheaper to take child benefit into account, which is why the child allowance only plays a practical role for them when calculating church tax and the solidarity surcharge. The child allowance only provides additional tax relief if the parents have a taxable income of around 66,000 euros.

How are environmentally friendly commuters encouraged?

From 2019 onwards, legislators will promote the environmentally friendly mobility of workers more than ever.

Tax-free job ticket

Employers can subsidize their employees' journeys by public transport without tax or social security contributions or cover the entire cost of a job ticket as tax-free benefits in kind. This applies if they grant the subsidies or benefits in kind in addition to the wages owed anyway; so not for a salary conversion. From 2019 it will no longer matter whether the ticket is issued as a monthly or annual ticket.

The advantage not only extends to trips to work, private trips in local public transport are also covered. However, the employee must state the tax-exempt employer benefits in his tax return, because they are offset against the flat-rate travel allowance. This means that you then reduce the deductible advertising expenses.

Use your company bike tax-free privately

You get it from your employer in addition to wages a company bike that you can also use privately, you do not have to pay tax on the monetary benefit. There are also no social security contributions. Liberation is first until the end of 2021 limited. You can use this, for example, by foregoing an upcoming salary increase in cash and instead having a company bike completely financed by the boss.

The tax exemption of the company bike can also be used by self-employed persons and freelancers.

Even in cases of one Salary conversion Is there a Tax reduction. A decree of the highest tax authorities of the federal states of March 13, 2019 stipulates that one percent of the half instead of the full gross list price is to be used for the evaluation of the monthly monetary benefit. This applies if the employer makes the company bike available to his employee for the first time between January 1 and December 31, 2021. Due to the halved assessment base, the wage tax and social security contributions are correspondingly lower.

The rules apply to bicycles and electric bikes that can travel up to 25 kilometers per hour. Faster electric bicycles (S-Pedelecs) are classified as motor vehicles in terms of traffic law. Therefore, the general rules for taxing company cars apply to them. This includes a temporary tax break for electric company cars. If you receive the S-Pedelec from your employer for the first time between the beginning of 2019 and the end of 2021, then only half the gross list price applies to the calculation of the pecuniary benefit.

Half the tax burden for electric company cars

If you, as an employee, are also allowed to use a company car privately, you have to pay tax on a pecuniary benefit. Two methods are possible: Those who do not keep a logbook determine the benefit on the basis of the flat-rate one percent rule. For each month, 1 percent of the gross new list price is then to be applied.

For an electric company car or an externally chargeable hybrid electric vehicle that is made available to you for the first time between January 1, 2019 and December 31, 2021, this assessment basis is halved. For the monetary benefit, you only have to apply half the gross list price. Taxes and social security contributions fall significantly. The employer may have purchased or leased the car as early as 2018. What is decisive, however, is that the employee may use it from the beginning of 2019 at the earliest.

However, hybrid electric vehicles must also meet other requirements:

  1. The carbon dioxide emissions must not exceed 50 grams per kilometer and
  2. the range using only the electric drive must be at least 40 kilometers.

With the logbook method, too, taxpayers benefit from the halved assessment base. You only have to apply half of the costs determined (for example, depreciation or leasing costs).

These rules also apply to electric bicycles that can travel faster than 25 kilometers per hour.

What will change in terms of old-age provision?

You can invest more tax-free in your retirement provision in 2019.

Higher deduction for pension expenses

Employees, civil servants and the self-employed can pay up to EUR 24,305 (2018: EUR 23,712) - EUR 593 more than 2018 - tax-free into the statutory pension insurance, into a professional pension scheme or into a Rürup savings contract. You can claim 88 percent of this (2018: 86 percent), i.e. a maximum of 21,389 euros (married couples: 42,778 euros), as special expenses (2018: 20,393 / 40,786 euros).

Employees who pay into the statutory pension insurance must, however, deduct the employer's tax-free contribution to the pension insurance from the pension expenses.

Pay a higher tax-free amount for company pension

Since 2018, employees have been able to invest significantly more in direct insurance, pension funds or relief funds. These are all forms of a funded company pension scheme.

In 2019, the maximum amount increases from 6,240 euros to 6,432 euros. This corresponds to 8 percent of 80,400 euros, the income threshold for general pension insurance. Up to 2017, a maximum of 4 percent was possible. However, the 4 percent limit in social insurance remains. According to this, only payments up to 3,216 euros (2018: 3,120 euros) are exempt from social security.

The Company Pension Strengthening Act, which promotes company pension schemes, entered into force in 2018. It providesLow wage earners with a maximum of EUR 2,200 gross per month, there are better opportunities for a company pension.

An employer who offers a company pension receives a tax bonus. For the employee, he pays an annual contribution of between 240 to 480 euros and can withhold 30 percent of this as a tax bonus. He receives this amount of 72 to 144 euros by offsetting it via the income tax registration.

The company must make its own employer contribution for the new contribution commitment in Social partner model with deferred compensation. This is a new company pension contract in which a non-binding target pension is agreed for which the employer is not liable. These investment products are to be introduced within the framework of collective agreements and controlled by the collective bargaining partners.

If the employee finances this pure contribution commitment himself through deferred compensation, then the employer also saves on social security contributions. In future, the employer must compensate for this benefit with a subsidy. The 15 percent employer subsidy has been phased in since 2018; initially only for contracts in the social partner model, since 2019 for all new contracts and from 2022 also for old contracts.

You can find more information on company pension schemes in our company pension scheme.

What will change for retirees?

The taxable pension component increases by 2 percentage points every year. In 2019, 78 percent of the first full gross annual pension must be taxed, only 22 percent remain tax-free. However, this only applies to new pensioners, i.e. those who will retire in 2019. The individual tax allowance determined by the tax office remains the same permanently.

Nothing will change for previous retirees. However, in July 2019 all pensioners can expect their retirement benefits to rise by a good 3 percent. This increases the taxable part of the pension, as pension increases are fully taxed.

For taxpayers who will turn 65 this year, the 2019 retirement benefit will decrease. This is a tax break for senior citizens who have reached the age of 64. This reduces the tax burden for additional income, for example from renting or capital investments (taxable income from Riester contracts, payments from company pension schemes and other investment income).

The Retirement benefit However, it will decrease annually until 2040. In 2019 it will only amount to 17.6 percent of the positive sum of this income and can amount to a maximum of 836 euros (2018: 19.2 percent to a maximum of 912 euros). Anything beyond that is taxable. The retirement benefit amount for older pensioners remains the same.

Pensions, widow's and orphan's pensions and similar payments based on civil service regulations are deemed to be pension payments. These are payments based on previous employment. Like wages, they must be taxed in full. However, there is one for that Pension allowance and a surcharge, each of which will be phased out by 2040. For 2019, the pension allowance is 17.6 percent up to a maximum of 1,320 euros per year. In addition, there is a surcharge of 396 euros, so a maximum of 1,716 euros in total.

What is changing in social security?

The statutory health insurance provides relief for employees and pensioners. The general contribution rate remains at 14.6 percent. In addition, the health insurance companies can demand an additional contribution. Until the end of 2018, the insured had to wear it alone. That changed on January 1, 2019. Employees and employers now finance the health insurance contribution in equal parts. Even retirees now only pay half.

The average additional contribution also drops from 1 percent to 0.9 percent. Cheap health insurance companies are below this. You save money by switching to a cheaper checkout.

More on this in the guide to statutory health insurance

  • There are clear differences between health insurance companies when it comes to service, additional benefits and contributions.
  • Providers recommended by us: IKK Classic, HEK, SBK, BKK24 and BKK VBU.

To the advisor

However, the contribution rate to long-term care insurance has risen by 0.5 percentage points. It is now 3.05 percent; for childless as much as 3.3 percent.

This increase is offset by the fact that the contribution rate in the unemployment insurance dropped from 3 percent to 2.5 percent. Pensioners cannot benefit from this because they do not pay any contributions.

The contribution assessment ceilings were also increased in 2019. These limit the social security contributions for higher earners. No further taxes are due for the part of the salary above this limit. The annual limit of 80,400 euros (2018: 78,000 euros) now applies to unemployment and pension insurance in western Germany and 73,800 euros (2018: 69,600 euros) in eastern Germany.

For statutory health insurance, the national contribution assessment limit is 54,450 euros (2018: 53,100 euros). The compulsory insurance limit was set at 60,750 euros (2018: 59,400 euros). Those who earn more can voluntarily take out statutory or private insurance.

How will the changes affect the net salary?

How will the tax and social security changes in 2019 affect the payslip overall? The software house Datev, a cooperative of tax consultants, has calculated an annual net comparison 2018/2019 for different constellations: Single with tax class I; married with two children and tax class III; childless married person with tax class III and single parent with one child and tax class II).

The good news: All of them have significantly more net than they did in 2018. The savings are even twice as high compared to the previous year.

The graphic below shows the respective annual relief for the different monthly salaries and constellations. The single parent in tax class II with a child who earns 6,500 euros a month makes the biggest leap in net salary - an increase of 498 euros this year. Even a single with tax class I and a married person with two children in tax class III receive almost as much relief. In all constellations, wage earners recorded the greatest plus with a gross salary of EUR 6,500.

With a salary of more than 6,500 euros, the savings are significantly lower. This is due to the higher contribution assessment ceilings, which lead to higher social contributions.

In the calculation shown in the graphic, a individual additional contribution taken into account in health insurance by 1 percent. On average, this has fallen to 0.9 percent. Those who are insured in a cheap health insurance company, for example in the HKK with 0.39 percent additional contribution, benefit from a somewhat higher relief than shown in the graphic.

What else is changing?

There are a number of other changes in tax law that many citizens can take advantage of.

Higher maintenance costs deductible

The maximum maintenance amount is identical to the amount of the basic tax-free allowance. Anyone who financially supports needy relatives or the ex-partner can deduct up to 9,168 euros in maintenance as an extraordinary burden (Section 33a (1) Income Tax Act). If you also pay health and long-term care insurance for the supported person, you can also deduct these amounts for basic coverage.

If you support your own children, you can only claim maintenance if you are not entitled to child benefit. Usually this only applies to children of legal age.

You must also deduct the supported person's own income above 624 euros per year from the maximum maintenance amount.

Moving fee increases

If you change your apartment for professional reasons, you can deduct the moving costs you have borne yourself as income-related expenses. In addition to certain individual costs (for example for the broker and the shipping company) you can apply a flat rate for so-called other moving costs and do not have to prove the costs incurred individually. The flat rate increases regularly. The next increase is due for removals completed by April 1, 2019.

If your school-age children need tuition because of the move, you can also set a flat rate for the tuition costs. The new flat rates are listed in the moving costs guide.

Higher mandatory limit for the tax return

Another change affects employees who have registered an individual tax allowance due to high advertising costs and therefore have lower monthly wage tax deductions. Usually you have to submit a tax return.
There is one exception to this, however: if a single person earns up to 11,600 euros in 2019 (2018: 11,400 euros), he does not have to submit a tax return. For jointly assessed individuals, the upper limit is 22,050 euros (2018: 21,650 euros).

Conversion of a registered civil partnership into a marriage

Same-sex couples have been able to enter into a registered civil partnership since 2001. Only since 2013 have they been able to be assessed together after a change in the Income Tax Act. The greater the income difference between the partners, the more they benefit from the splitting advantage and together pay less taxes than with individual assessments.

The Hamburg Finance Court ruled in July 2018 that the conversion of a civil partnership into a marriage is a retrospective event (judgment of July 31, 2018, Az. 1 K 92/18). As a result, the tax assessments can still be changed even after they have become final. This may go back to 2001.

The tax legislator reacted to this and set deadlines for converting a registered civil partnership into a marriage. After the conversion, the spouses should be treated as if they had married on the day the partnership was established. If the conversion into a marriage takes place by December 31, 2019, the spouses can jointly submit an application for the issuance, amendment or cancellation of a tax assessment by the end of 2020, so that the joint assessment is subsequently taken into account.

In this way, those affected can secure a tax refund for several years by converting their civil partnership into a marriage soon. This is particularly interesting for couples who entered into a civil partnership between 2001 and 2012 and who had different income levels. You didn't have the splitting advantage back then, but you can make up for it.

By when do you have to submit the 2018 tax return?

From the 2018 tax year, new rules apply to the submission deadline for tax returns. You can benefit from the deadlines extended by two months for the first time in 2019. Because you have to file the 2018 tax return first until July 31, 2019 submit.

Whoever hires a tax advisor or income tax aid association to do so has until March 2, 2020. These deadlines apply to taxpayers who have to file an income tax return. Those who do this voluntarily still have four years to spare.

Automatic minimum late payment surcharge is introduced

On the other hand, if you are obliged to submit your tax return late, you risk a late fee. Up until now, tax officials had a great deal of discretion as to whether and how much they set a late payment penalty. It changes.

There are stricter rules for tax returns that must be submitted from 2019. The explanation won't within 14 months submitted after the end of the calendar year, the tax office must set a surcharge for the delay. This amounts to 0.25 percent of the additional payment amount, at least 25 euros, for each month of delay commenced.

Example: You have to file an income tax return for 2018, but do not submit it until March 2020 or even later. From March 2020 you will have to pay a late fee.

Download e-book

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Results of previous Finanztip research

Udo Reuss

Udo Reuss

The tax lawyer and business graduate Udo Reuß is responsible for tax issues at Finanztip. Before that, he worked for various business and specialist publishers such as Handelsblatt, F.A.Z.-Verlagsgruppe, Haufe-Lexware and Vogel Business Media - 14 years of which he worked as editor-in-chief of trade magazines. He draws the relevant judgments for tax savers from the complex tax law.

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