Overview

• No salary increase in Germany can result in lower overall net pay.
• Only the additional euros from a pay rise are subject to higher marginal tax rates, not the entire salary.
• Increased earnings can trigger cuts to social benefits such as Elterngeld, Kinderzuschlag or Wohngeld, reducing total household income.
• Officials attribute the persistent myth to confusion between marginal and average tax rates under Germany’s progressive system.
• Negotiating tax-exempt fringe benefits like commuter allowances or job tickets can be more effective than small gross salary increases.