German income tax 2026: what's left of your profit?

In short: Germany does not tax your profit (Gewinn) but your taxable income (zu versteuerndes Einkommen, zvE). Health and long-term care insurance, pension contributions and allowances come off the profit first; the Finanzamt applies the tariff to the rest. As a Freiberufler with €60,000 profit, that is €47,304 taxable income and about €9,614 income tax (Einkommensteuer).

1. 1

   Sum of income: your profit from the cash-basis accounts (Einnahmenüberschussrechnung), before trade tax, plus your other income such as a salary or rent; when you file jointly, your partner's income too. A loss reduces your other income of the same year.

2. 2

   Total income: single parents deduct the relief (Entlastungsbetrag), €4,260 for the first child and €240 for each further child (§ 24b EStG).

3. 3

   Income: minus health and long-term care insurance, pension contributions up to €30,826 and special expenses (Sonderausgaben), at least the lump sum of €36 (§ 10, § 10c EStG).

4. 4

   Taxable income (zu versteuerndes Einkommen, zvE): minus the child allowances, €4,878 per child and parent, if they are worth more than the child benefit (§ 31 EStG). Rounded down to whole euros.

5. 5

   Income tax: the tariff applied to the taxable income, minus the trade tax credit, plus the child benefit if the allowances were deducted.

6. 6

   On top: solidarity surcharge and church tax on the income tax and, with a Gewerbe, the municipality's trade tax.

Example: a Gewerbe in Munich, €100,000 profit

With your own figures, the calculator shows you the same calculation, step by step with its legal basis.

In short: Up to €12,348, the basic allowance (Grundfreibetrag), you pay no income tax in 2026. Above it, the marginal rate rises from 14% to 42%; from €277,826 it is 45%. Each rate applies only to the part of your income within its zone.

Taxable income is rounded down to whole euros, and so is the tax. With splitting (Ehegattensplitting), the Finanzamt computes the tax on half of the joint income and doubles it; that is why couples with very unequal incomes pay less together than two single people.

Above the basic allowance, your average rate, the tax divided by your taxable income, stays below your marginal rate, the rate on your next euro. As a Freiberufler with €60,000 profit, that is 20.3% on average and 34.2% on the next euro. Measured against your whole profit you pay 16.0% in taxes, because contributions and the lump sum come off first. The calculator shows both curves with your point on them.

Income tax and Soli 2026 by taxable income, for single filers (Grundtabelle) and joint filers (Splittingtabelle), without church tax. Taxable income is not your profit: how you get from one to the other is shown under calculation.

In short: You only pay the Soli once your income tax exceeds €20,350, or €40,700 when filing jointly; most taxpayers pay none. Church tax applies only if you are a registered church member: 8% of your income tax in Bavaria and Baden-Württemberg, 9% elsewhere.

Solidarity surcharge (Solidaritätszuschlag)

Above the exemption limit (Freigrenze) the Soli does not jump to 5.5%; it rises by 11.9% of the amount above the limit (§ 4 SolZG). At €90,000 taxable income that is €751.36 instead of €1,466.52. The full 5.5% applies from €37,838.28 income tax. The base is the income tax after the trade tax credit, but always with child allowances, even if you receive child benefit (§ 3 Abs. 2 SolZG).

Church tax (Kirchensteuer)

The base is the income tax with child allowances and without the trade tax credit (§ 51a Abs. 2 EStG), so a Gewerbe does not lower your church tax. As a Freiberufler with €60,000 profit you pay about €865 in Berlin and about €769 in Bavaria. You deduct the church tax you paid as a special expense in the year you pay it. On high incomes many states and churches cap it, sometimes only on application, at around 2.75% to 4% of taxable income; Bavaria has no such cap. The calculator does not apply it.

In short: With a Gewerbe you pay trade tax (Gewerbesteuer) to your municipality, but get most of it back through your income tax. Up to a multiplier (Hebesatz) of 400%, the credit usually offsets it; above that, a remainder is left. In Munich (490%) that is about €2,378 a year on €100,000 profit.

1. 1

   Trade income (Gewerbeertrag): the profit, rounded down to the full €100 (§ 11 Abs. 1 GewStG). The calculator leaves out the add-backs of § 8 GewStG: interest in full and rents and licences in part are added up, and only a quarter of whatever exceeds €200,000 a year raises the trade income.

2. 2

   Allowance: €24,500 for sole traders and partnerships, not for a GmbH.

3. 3

   Base amount (Messbetrag): 3.5% of the rest, rounded down to whole euros.

4. 4

   Trade tax: base amount times the municipality's multiplier (Hebesatz), in 2026 at least 200%. It is not a business expense and does not reduce your profit (§ 4 Abs. 5b EStG).

5. 5

   Credit: Your income tax goes down by 4.0 times the base amount, capped at the trade tax you actually pay and at the part of your income tax that falls on your trade income (§ 35 EStG).

Multipliers compared

At 400% the Gewerbe even comes out slightly lower, at about €24,667, than freelance work at about €25,181: the credit reduces the income tax and with it the Soli, while the trade tax itself is fully offset. Below 400% the trade tax you actually pay caps the credit, so you never get back more than you pay. From 2027, the minimum multiplier rises to 280%.

In short: You pay income tax quarterly in advance (Vorauszahlungen), on 10 March, 10 June, 10 September and 10 December; trade tax on 15 February, 15 May, 15 August and 15 November. Set aside a twelfth of your annual taxes every month.

In your first year the Finanzamt sets the advance payments from your estimate in the tax registration questionnaire (Fragebogen zur steuerlichen Erfassung). If you estimate too low, the first tax notice often brings three things at once: the back payment for year one, a retroactive advance payment for year two and higher advance payments for the current year. So enter a realistic figure; the calculator shows you the tax it leads to. Child allowances and child benefit are left out of the advance payments (§ 37 Abs. 3 EStG) and only settled with the tax notice.

As a Freiberufler with €60,000 profit, that is about €801 a month for taxes, about €1,856 with health and long-term care insurance. VAT (Umsatzsteuer) is not included: it belongs to the Finanzamt, so set it aside separately unless you are a small business (Kleinunternehmer).

In short: Whether you work as a Freiberufler or run a Gewerbe decides trade tax, trade registration and IHK membership, not the income tax itself. The Finanzamt classifies you from what you state in the tax registration questionnaire.

• Freiberufler (§ 18 EStG): the listed professions such as doctor, lawyer, tax adviser, engineer, architect, journalist or translator, similar professions and independent scientific, artistic, literary, teaching or educational work. No trade registration (Gewerbeanmeldung), no trade tax, no IHK membership.
• Gewerbe (§ 15 EStG): an independent, profit-seeking activity that is not a liberal profession, not farming or forestry and not mere asset management such as renting out property: trading, crafts, agencies or software sold as a product, for example. Trade registration with the municipality, a fee to the IHK or the chamber of crafts (Handwerkskammer) and trade tax on profits above €24,500.
• Both: If the activities can be separated, the Finanzamt taxes them separately. In a partnership, even a small commercial part can make all of its income commercial.

If you are unsure, describe your activity in the tax registration questionnaire as precisely as you can. Starting as a sole trader is explained in set up a sole proprietorship; for freelancers there is the Freiberufler starter kit.

And when does a GmbH make sense?

From about €100,000 profit, many founders compare with a GmbH. It pays corporate income tax (Körperschaftsteuer) with Soli and trade tax on its profit, with no allowance and no credit. Your salary as managing director reduces its profit and is taxed with you, dividends with the flat withholding tax (Abgeltungsteuer). Whether that works out for you depends on salary, dividends and reserves and is a question for advice from a tax adviser. How the formation works is explained in set up a GmbH.

In short: For 2027 there is only a government draft, the Einkommensteuerreformgesetz 2027, adopted by the cabinet on 2 September 2026. The Bundestag and Bundesrat have not passed it yet (as of 2 November 2026); the figures may change on the way. Without a new law, the 2026 tariff continues to apply in 2027.

• €60,000 profit: As a Freiberufler you pay about €9,491 under the draft instead of about €9,614.
• €300,000 profit: about €114,939 instead of about €114,879, because 45% starts earlier and 47% is added.
• Social security: The 2027 values also come from federal government drafts, such as the higher contribution ceiling. Already passed, by contrast, is the higher minimum trade tax multiplier of 280%.

In the calculator you choose 2027 as the year; the result is then marked "draft". The text of the draft is listed under sources.

As of: 2 November 2026. Tariff under § 32a EStG, recalculated and checked against the published basic and splitting tables. The social security values follow the reference figures (Rechengrößen) the government sets for each year. The calculator runs in your browser; firma.de does not store your entries.

General tax information, not tax advice. The calculator estimates your taxes as of 2 November 2026; they are assessed by the tax office (Finanzamt) and, for trade tax, by your municipality. It does not cover VAT, credit for wage tax already withheld, capital income or special cases such as the partial-income method (Teileinkünfteverfahren) or the progression clause (Progressionsvorbehalt).

Laws and draft (in German)

• § 2 EStG
• § 10 EStG
• § 24b EStG
• § 31 EStG
• § 32 EStG
• § 32a EStG
• § 35 EStG
• § 37 EStG
• § 51a EStG
• § 3 SolZG
• § 4 SolZG
• § 11 GewStG
• § 16 GewStG
• § 19 GewStG
• § 240 SGB V
• § 55 SGB XI
• Regierungsentwurf Einkommensteuerreformgesetz 2027 (government draft), Federal Ministry of Finance (in German)