Tax class combination III/V still very popular

More couples who are taxed jointly are still opting for the popular tax class combination III/V instead of the factor method of combination IV/IV.

Even though the German government is working on abolishing income tax classes III and V and generally replacing them with the factor method of tax class IV, it is still the most popular tax class combination. According to the Federal Statistical Office, 39 % of couples assessed jointly chose tax class combination III/V in 2020. In a further 25 %, only one of the partners earned income from work, which was then taxed according to tax class III. Only 36 % of the couples were jointly assessed in tax class IV.

By combining tax classes III and V, couples living together can reduce their income tax to be paid during the year compared to tax class IV. Employees with tax class combinations III and V are therefore much more likely to have to make additional payments, with almost 46 % of cases affected in 2020. Couples assessed jointly in tax class IV only had to make back payments in just under 5 % of cases and can usually expect refunds when they submit their annual tax return. At just under 3.3 billion euros in total in 2020, these were more than twice as high as for couples in tax class combinations III and V, who only received around 1.5 billion euros in income tax refunds despite the larger number.