Germany Severance Pay Tax Calculator 2026 — Fünftelregelung (One-Fifth Rule)
Calculate Your Severance Pay Net Amount 2026
Enter your severance amount and personal details. The calculator shows you instantly the net amount with and without the Fünftelregelung — including your tax savings.
Comparison: Severance Pay Net Amount With and Without Fünftelregelung
The table below shows how much tax you can save with the Fünftelregelung. The calculation is based on tax class I, a regular annual salary of €60,000, and no church tax – for the 2026 tax year.
| Brutto-Abfindung | Netto ohne Fünftelregelung | Netto mit Fünftelregelung | Steuerersparnis | Effektiver Steuersatz |
|---|---|---|---|---|
| €10.000 | €6.800 | €7.350 | €550 | 26,5% |
| €25.000 | €15.500 | €17.200 | €1.700 | 31,2% |
| €50.000 | €28.000 | €33.500 | €5.500 | 33,0% |
| €100.000 | €50.000 | €63.000 | €13.000 | 37,0% |
| €150.000 | €70.000 | €88.000 | €18.000 | 41,3% |
Assumptions: Tax class I (single, no children), regular annual salary €60,000, no church tax, Solidaritätszuschlag included, tax year 2026. Your actual savings may vary depending on your personal situation.
Note: The values in this table are for orientation. Use the interactive calculator above for your individual calculation.
The tax savings from the Fünftelregelung increase with the amount of severance. At €100,000 severance, you save €13,000 in taxes – a significant difference for your financial planning.
How the Fünftelregelung Works (Simply Explained)
The Fünftelregelung under § 34 EStG is a tax concession for one-time income such as severance payments. It prevents a large one-time payment from being taxed at your full personal tax rate in a single year – which would otherwise result in a significantly higher tax burden.
The trick: The tax office treats the severance payment as if you received it spread over five years. This significantly lowers your average tax rate on the severance payment.
What Is an Extraordinary Income?
Not every one-time payment qualifies for the Fünftelregelung. It must be an extraordinary income – income that does not occur regularly and falls outside your normal employment relationship.
Typical examples of extraordinary income:
- Severance payments due to operational redundancy or termination agreements
- Compensation under § 24 No. 1 EStG (e.g., for contractual violations)
- Back payments for multiple years (e.g., retroactive salary increases)
- Severance for company pensions or lump-sum payouts from occupational pension schemes
- Compensation for inventions or patent transfers
The severance payment must be concentrated – meaning it falls due in a single calendar year and is not paid in installments over multiple years.
The 4-Step Calculation Overview
The calculation of the Fünftelregelung follows a fixed formula that the tax office applies when you file your tax return. Here is a simplified breakdown:
The tax office calculates income tax on your regular annual income without the severance payment.
The tax office adds one-fifth (20%) of the severance to your regular income and recalculates the tax.
The difference between the two tax amounts is calculated – this is the tax increase from the one-fifth portion.
The difference is multiplied by 5 – this gives the actual tax on the entire severance payment.
The formula summarized:
Tax on severance = 5 × (Tax on (regular income + severance/5) − Tax on (regular income))
This calculation is performed automatically by the tax office when you apply for the Fünftelregelung in your tax return.
The special thing: The tax savings arise because the severance payment does not fall into the top tax progression. Instead of being taxed at 42% (or more), it is taxed at the average tax rate of your income – which can be significantly lower.
Important to understand: The Fünftelregelung is not a 50% tax discount. It is a tariff smoothing mechanism that prevents your severance from falling into the highest tax progression. The actual tax benefit depends on your individual income situation.
Fünftelregelung Example Calculation: Step by Step
To help you truly understand the calculation, here is a concrete example with real numbers. This is what the Fünftelregelung looks like in practice.
Example: Employee with €60,000 Annual Salary and €100,000 Severance
Starting situation:
- Regular annual salary: €60,000
- Gross severance: €100,000
- Tax class: I (single, no children)
- Church tax: No
- Tax year: 2026
The following table shows the step-by-step calculation of the tax on the severance payment under the Fünftelregelung.
| Step | Calculation | Result |
|---|---|---|
| Step 1 Tax without severance |
Income tax on €60,000 (2026 basic table) | €14,233 |
| Step 2 Tax with 1/5 of severance |
€60,000 + (€100,000 / 5) = €80,000 Income tax on €80,000 |
€22,464 |
| Step 3 Calculate difference |
€22,464 − €14,233 = €8,231 | €8,231 |
| Step 4 Multiply by 5 |
€8,231 × 5 = €41,155 | €41,155 |
| Tax on severance with Fünftelregelung | €41,155 | |
| Tax on severance without Fünftelregelung | €55,764 | |
| Your tax savings | €14,609 | |
What Do These Numbers Mean for You?
The example calculation shows the decisive advantage of the Fünftelregelung:
- Without the rule, you would pay €55,764 in taxes on the €100,000 severance.
- With the Fünftelregelung, you pay only €41,155 in taxes.
- That is a tax savings of €14,609 – additional net money in your pocket.
Your net advantage:
With a severance payment of €100,000, the Fünftelregelung leaves you with €14,609 more net than without the rule. This is a significant difference that can materially impact your financial decisions.
Important note: Your personal tax savings may differ from this example. The actual amount depends on your tax class, federal state (church tax), your income, and other factors. Use the interactive calculator above for your individual calculation.
Comparison: With vs. Without Fünftelregelung
The decision for or against the Fünftelregelung has significant financial implications. The following comparison shows how the tax burden changes at different severance amounts – with and without the rule.
How the Fünftelregelung Affects Your Severance
The chart and table below illustrate the crucial difference: The Fünftelregelung not only lowers your tax burden but also increases the proportion that actually remains net.
| Brutto-Abfindung | Ohne Regelung (Netto) | Mit Regelung (Netto) | Steuerersparnis | Mehr Netto in % |
|---|---|---|---|---|
| €10.000 | €6.800 | €7.350 | €550 | +8,1% |
| €25.000 | €15.500 | €17.200 | €1.700 | +11,0% |
| €50.000 | €28.000 | €33.500 | €5.500 | +19,6% |
| €100.000 | €50.000 | €63.000 | €13.000 | +26,0% |
| €150.000 | €70.000 | €88.000 | €18.000 | +25,7% |
Three Key Insights from the Comparison
At €10,000 you save €550, at €100,000 already €13,000 – the tax benefit grows disproportionately with the amount of the severance.
With the Fünftelregelung, your net share increases by 8% to 26% – depending on the amount of the severance. At €100,000, that is €13,000 more in your pocket.
The Fünftelregelung "smooths" the tax progression. Your effective tax rate on the severance is significantly lower than your top tax rate – that is the core of the benefit.
When the Fünftelregelung Is Particularly Beneficial
The Fünftelregelung is not equally advantageous in every situation. It provides the greatest benefit when:
- Your severance is high – the higher the one-time payment, the greater the progression effect that the rule mitigates.
- Your regular income is low – then the severance falls into a lower tax progression, which further increases the savings.
- You have no other extraordinary income in the same year – multiple large one-time payments in the same year can dilute the effect of the Fünftelregelung.
- You cannot spread the payout over multiple years – if the severance is paid as a lump sum, the Fünftelregelung is the best option.
Example of an optimal situation
Regular income: €40,000
Severance: €80,000
Tax savings: approx. €8,500 → +21% net
Example of a less advantageous situation
Regular income: €80,000
Severance: €20,000
Tax savings: approx. €1,200 → +6% net
Since 2025, you must apply for the Fünftelregelung yourself in your tax return. The employer no longer applies it automatically. If you miss the application, you forfeit the tax savings.
Requirements for the Fünftelregelung 2026
Not every severance claim automatically qualifies for the Fünftelregelung. To use the tax benefit, certain legal requirements must be met. Here is what you need to know.
The Three Main Requirements at a Glance
Extraordinary Income
The payment must be an extraordinary income under § 34 EStG. Typical examples are severance payments, compensation, or back payments for multiple years.
§ 34 Para. 1 EStG
Concentration of Income
The income must be concentrated – meaning it falls due in one calendar year. At least 90% of the payment must be received in the same year.
Unwritten statutory element
Compensation Character
The severance must have compensation character – i.e., it must compensate for job loss or another significant impairment (§ 24 No. 1 EStG).
§ 24 No. 1 EStG
Practical Check: Do You Meet the Requirements?
Answer these four questions to quickly check whether you qualify for the Fünftelregelung:
If you answered "Yes" to all four questions: You meet the requirements for the Fünftelregelung. You should apply for the rule in your tax return.
If you are unsure: Consult a tax advisor. The Fünftelregelung can also be applied in unclear cases – a tax advisor will review your individual situation.
Common Pitfalls in the Requirements Check
❌ Installment payment as concealed splitting
If the severance is spread over multiple years, the tax office may reject the Fünftelregelung. The reasoning: The income is then no longer concentrated.
❌ No compensation character
A voluntary special payment or bonus does not have compensation character. The severance must compensate for job loss – otherwise the Fünftelregelung does not apply.
❌ Multiple extraordinary incomes in the same year
If you receive multiple severance payments or other extraordinary income in the same year, they are added together. The Fünftelregelung is then applied to the total – which can reduce the benefit.
❌ Missed application in the tax return
Since 2025, you must apply for the Fünftelregelung yourself in your tax return. If you forget the application, you will not receive the tax savings.
Important for 2026: The rule was changed in 2025 – the employer no longer applies the Fünftelregelung automatically. You must apply for the Fünftelregelung yourself in your tax return (Appendix N). The tax advantage will then be refunded to you by the tax office.
Important Change from 2025: How to Apply for the Fünftelregelung Correctly
Then vs. Now: What Has Changed
| Aspect | Before 2025 | From 2025 |
|---|---|---|
| Application of the rule | Automatically by the employer during payroll | Independent application in the tax return |
| Tax deduction at payout | Directly reduced – you receive the lower tax deduction from the start | Initially higher tax deduction – the refund comes later from the tax office |
| Responsibility | Lies with the employer (wage tax deduction procedure) | Lies with you (tax return obligation) |
| Timing of the tax benefit | Immediately at payout | After processing your tax return (several months later) |
The New Timeline for 2026
- Severance payout – You receive the gross amount with full tax deduction (like regular salary).
- Submit tax return – By July 31, 2027 (for 2026) or with tax advisor deadline until December 31, 2027.
- Apply for Fünftelregelung – In the tax return, you must apply for reduced taxation and enter the severance in Appendix N.
- Tax assessment – The tax office calculates the tax with the Fünftelregelung and refunds the overpaid tax.
How to Enter the Severance in Your Tax Return
The application for the Fünftelregelung is made in your annual income tax return. Here are the most important steps:
Enter the severance in Appendix N. The severance is recorded there as "other benefits." Your employer has already reported the severance separately in the wage tax certificate (lines 9-10) – use these figures.
In Appendix N or the cover sheet of the tax return, you must apply for reduced taxation under § 34 EStG. Without this explicit application, the Fünftelregelung will not be applied.
Enter the amount of extraordinary income (the severance) in the designated field. The tax office will then automatically check whether the requirements for the Fünftelregelung are met.
Submit your tax return – preferably electronically via ELSTER. The tax office will then calculate the tax with the Fünftelregelung and issue a corresponding tax assessment.
Help: In Appendix N, you will find the severance in the lines for "other benefits." The application for reduced taxation is made in the cover sheet of the tax return. If you are unsure, ask your tax advisor or use the ELSTER help function.
What Happens If You Miss the Application?
The consequence is clear:
- The severance is taxed at your full personal tax rate.
- The severance pushes your income into a higher tax progression – this can lead to a significantly higher tax burden.
- You forfeit the tax savings that would be due to you under the Fünftelregelung.
This means: With a severance payment of €100,000, missing the application can lead to an additional burden of up to €14,609 – money that would otherwise be yours.
Your task for 2026: Apply for the Fünftelregelung actively in your tax return. The employer can and will no longer do this automatically. Secure your tax advantage.
Tax Class Optimization: How to Save Even More
The tax class affects the interim wage tax deduction – and therefore how much of your severance is withheld at payout. The right tax class can help you optimize your liquidity and pay less tax during the year.
How the Tax Class Affects the Severance
The tax class determines the wage tax deduction – not the final tax burden. This is an important distinction:
- During the year: The tax class determines how much wage tax the employer withholds when paying out the severance.
- Final: In the tax return, the actual tax is calculated based on your personal tax rate – regardless of the tax class.
This means: The tax class affects when you receive the tax benefit – not whether you receive it.
Comparison of Tax Classes for Severance Payments
| Tax Class | Status | Effect on Severance | Recommendation |
|---|---|---|---|
| I | Single, no children | Standard deduction, no special features | No change needed |
| II | Single, with children (relief amount) | Lower deduction due to child allowance | Advantageous if applicable |
| III | Married, sole earner or main earner | Lowest wage tax deduction – the severance is taxed at the lowest rate | ✅ Best choice for sole earners |
| IV | Married, both work (similar to I) | Standard deduction like I | No change needed |
| V | Married, secondary earner | Highest wage tax deduction – the severance is heavily taxed | ❌ Disadvantageous – switch if possible |
| VI | Second job or side job | Highest deduction, no allowances | ❌ Disadvantageous – avoid if possible |
Optimization Strategies for Your Severance
Strategy 1: Change tax class before payout
If you are married and will receive the severance in the coming months, you can apply for a tax class change. Switching from V to III can significantly reduce the wage tax deduction.
Example: With €100,000 severance, switching from V to III can reduce the interim tax deduction by €5,000–€8,000 – more liquidity in your pocket.
Strategy 2: Tax class change for both spouses
For dual-earner couples, switching to III/V or IV/IV with factor can be beneficial. The "factor" adjusts the interim tax burden to the final tax burden – which can lead to a fair distribution.
Strategy 3: Apply for allowances
You can apply to the tax office for an allowance for your severance if you know the payout is coming. This reduces the wage tax deduction – even without a tax class change.
Important: The Final Tax Burden Remains Unchanged
What you need to understand:
The tax class affects the interim wage tax deduction – not the final tax burden. In the tax return, the actual tax is calculated based on your personal tax rate. This means:
- If you pay too much tax during the year, you will receive a refund from the tax office.
- If you pay too little tax during the year, you will have to pay the difference.
Your goal should be: To achieve an accurate interim tax burden to avoid a large back payment or a large refund. The Fünftelregelung itself is only applied in the tax return.
Conclusion on tax class optimization:
The tax class is a tool for liquidity management, not tax avoidance. Use the options to benefit from your money during the year – but don't forget that the final tax burden is not affected by the tax class.
Further information:
Severance Pay and Unemployment Benefits (ALG I): What You Need to Know
How the Severance Affects Your ALG I
The Federal Employment Agency checks when calculating ALG I whether the severance is considered compensation for job loss. If this is the case, the severance can lead to a blocking period – meaning you will not receive unemployment benefits for a certain period.
The most important rules at a glance:
| Factor | Effect on ALG I | What you can do |
|---|---|---|
| Severance as compensation | Can lead to a blocking period of up to 12 weeks | Check whether the severance is considered compensation or a "voluntary payment" |
| Severance amount | Very high severance amounts can affect the assessment basis | Get advice from the Federal Employment Agency in advance |
| Termination agreement | A termination agreement can also lead to a blocking period | Check whether operational redundancy dismissal is the better option |
| Insurable employment | The severance itself is not subject to contributions to unemployment insurance | The severance does not increase your ALG I claims |
Avoid the Most Common Pitfalls
Pitfall 1: Blocking period due to termination agreement
If you sign a termination agreement, the Federal Employment Agency can impose a blocking period of up to 12 weeks. The reasoning: You caused the dismissal yourself.
Solution: Seek advice from a specialist lawyer before signing. Check whether operational redundancy dismissal is possible.
Pitfall 2: Severance as a "voluntary payment"
If the severance is not considered compensation for job loss, it can be classified as a "voluntary payment" – which can lead to a blocking period.
Solution: Ensure that the severance is designated as compensation in the termination agreement or dismissal letter.
Pitfall 3: Insufficient advice
Many employees underestimate the impact of severance on ALG I. The Federal Employment Agency reviews each case individually – and the decision can be surprising.
Solution: Get a binding opinion from the Federal Employment Agency in advance or consult a lawyer.
Practical Check: How to Protect Your ALG I Claims
The most important thing about ALG I:
The severance itself is not subject to contributions to unemployment insurance – so it does not increase your ALG I claims. But: The severance can lead to a blocking period if it is considered compensation for job loss. Get advice before signing – this is the most important protection against financial surprises.
Contact the Federal Employment Agency before you sign the termination agreement. Ask about the impact of the severance on your ALG I. Prior advice can save you a lot of trouble and financial losses.
Additional Tax Strategies for Your Severance Pay
The Fünftelregelung is the most important lever to save taxes on your severance. But there are other strategies that can further reduce your tax burden. Here are the best approaches.
Strategy 1: Defer Payout to the Next Year
If you have the option to defer your severance payout to the next calendar year, it can be tax-advantageous. This is especially true if:
- You will have less income in the next year (e.g., due to unemployment or partial retirement).
- The basic allowance increases in the next year (which regularly happens).
- You have other extraordinary income in the current year that would conflict with the severance.
Example: Defer payout to 2027
You receive a severance payment of €80,000. In 2026, you have a regular income of €70,000. In 2027, you will only have €20,000 income (e.g., from ALG I).
Advantage: The severance falls into a lower tax progression in 2027. The tax savings can be €3,000–€5,000 – in addition to the Fünftelregelung.
Note: The employer must agree to the payout in the following year. Negotiate this in the termination agreement.
Strategy 2: Avoid Other Extraordinary Income
If you receive multiple extraordinary incomes in the same year (e.g., severance + bonus + pension severance), they are added together. The Fünftelregelung is then applied to the total – which can reduce the tax benefit.
- Check: Can you defer other extraordinary income to the next year?
- Negotiate: Can you defer bonus or special payments to the following year?
Strategy 3: Optimize Social Security Contributions
Severance payments are generally exempt from social security contributions – as long as it is a one-time payment. However, if the severance is paid in installments, social security contributions may apply.
- One-time payment: No social security contributions on the severance.
- Installment payment: Social security contributions may apply – up to the contribution assessment ceiling (BBG 2026: €101,400 annually for RV/AV).
Arrange for a one-time payout of the severance with your employer. This avoids social security contributions on the severance – which can save thousands of euros.
Strategy 4: Use Tax Allowances Optimally
Use all tax allowances available to you to reduce your tax burden. The most important allowances for 2026:
| Allowance | Amount (2026) | Effect on severance |
|---|---|---|
| Basic allowance (single) | €12.348 | Reduces taxable income – including severance |
| Basic allowance (married) | €24.696 | Double allowance for joint filing |
| Child allowance (per child) | €9.312 | Reduces tax burden – including severance |
| Relief amount for single parents | €4.260 | Additional allowance for single parents |
| Work-related expenses (lump sum) | €1.230 | Can reduce tax burden |
Strategy 5: Deduct Tax Advisor Costs
The costs for a tax advisor in connection with your tax return can be deducted as work-related expenses or extraordinary burdens. This further reduces your tax burden.
- Costs for tax advice related to the severance and Fünftelregelung are deductible.
- Consultation costs for the termination agreement may also be deductible (as legal consultation costs).
Strategy 6: Use Additional Retirement Provision
If you invest part of the severance in retirement provision (e.g., private pension insurance or occupational pension scheme), the contributions may be tax-deductible under certain conditions.
- Riester pension: Contributions up to €2,100 per year are tax-deductible.
- Basic pension (Rürup): Contributions up to €27,566 per year are tax-deductible.
- Occupational pension scheme: Contributions are tax-advantaged.
The Best Strategies for Your Severance – Summarized
- Apply for the Fünftelregelung – this is the biggest lever (savings: €550–€18,000+).
- Defer payout to the next year – if you have less income in the following year.
- Arrange a one-time payout – avoids social security contributions.
- Use tax allowances – basic allowance, child allowance, etc.
- Deduct tax advisor costs – the advice pays for itself twice over.
- Increase retirement provision – use tax-advantaged retirement savings.
Your next step:
Use the interactive calculator above to calculate your individual tax savings. Then discuss the strategies with your tax advisor – and secure the maximum tax benefit for your severance.
Optimize Your Severance Pay: How to Get the Maximum Benefit
You now have all the information to optimize your severance tax situation. The crucial difference from other calculators: Here you don't just see a number – you understand why the Fünftelregelung works and how you get the maximum benefit from it.
The Real Comparison
Not just a single number – you see the direct comparison between taxation with and without the Fünftelregelung. You know exactly how much you save.
No Surprises
Other calculators hide that your severance can affect your unemployment benefits. We show you what to look out for – and how to avoid pitfalls.
Practical Guidance
You don't just learn how much tax you pay – you also learn how to apply for the Fünftelregelung and when you need to act.
2025 Update Included
The most important change since the introduction of the Fünftelregelung: Since 2025, you must apply for the rule yourself. We show you how.
What You Should Do Now
Use the calculator above with your individual data. You will see the net amount and your tax savings immediately.
Test different tax classes and federal states. Find the optimal configuration for your situation.
Contact the Federal Employment Agency to clarify the impact of your severance on unemployment benefits – before you sign the termination agreement.
Don't forget: Since 2025, you must apply for the Fünftelregelung yourself in your tax return. Use the guidance from this guide.
The Most Important Points in Brief
Legal notice: This calculator and the information provided are for information and orientation purposes only. They do not replace binding tax advice. For the final tax calculation and individual advice, please consult a tax advisor or the tax office. The figures provided here are based on the tax laws of 2026 and may change.
Frequently Asked Questions About the Fünftelregelung
Here you will find the most important questions and answers about the Fünftelregelung and the taxation of severance payments in Germany. For complex cases, we recommend consulting a tax advisor.
Methodology and Data Sources
The severance tax calculator is based on the current tax laws and official publications for the 2026 tax year. All calculations follow the statutory requirements of § 34 EStG (Fünftelregelung) and use the official tax tables of the Federal Ministry of Finance.
Data Sources and Calculation Basis
Tax Laws
- § 34 EStG – Extraordinary income (Fünftelregelung)
- § 24 No. 1 EStG – Compensation
- § 32a EStG – Income tax tariff 2026
- Solidaritätszuschlagsgesetz 2026 – Soli calculation
Official Tables
- Basic table 2026 – Income tax for singles
- Splitting table 2026 – Income tax for married couples
- Contribution assessment ceilings 2026 – Social security
- Church tax rates – 8% (Bayern, BW) / 9% (other states)
Calculation Logic
- Linear interpolation – between values in the tax table
- Fünftelregelung formula – 5 × (Tax on zvE + severance/5 − Tax on zvE)
- Soli allowance threshold – €20,350 (single) / €40,700 (married)
- SV contribution assessment – BBG KV/PV: €69,750, BBG RV/AV: €101,400
Assumptions and Limitations
The calculator's calculations are based on the following assumptions:
- Taxable income: The calculator uses the regular annual salary you specify as the basis for the tax calculation. Other income (e.g., capital gains, rental income) is not taken into account.
- Tax deductions: The calculator considers income tax, Solidaritätszuschlag (optional), church tax (depending on the federal state), and social security contributions (optional).
- Social security contributions: For one-time payments, these are generally exempt from contributions. The calculator offers an optional consideration for installment payments.
- Allowances: The basic allowance (single: €12,348, married: €24,696) and the child allowance (€9,312 per child) are automatically taken into account.
Note: The calculations are approximate values. The actual tax burden may differ from the values shown here, as the tax office considers additional factors in individual cases (e.g., work-related expenses, special expenses, extraordinary burdens). For a binding tax calculation, please consult a tax advisor.
2025 Update: What Has Changed
The calculator was updated in July 2026 to reflect the most important change in recent years:
From 2025 onward: The Fünftelregelung is no longer applied automatically by the employer. You must apply for the rule yourself in your tax return. The calculator highlights this change in the results and shows you what you need to do.
Last updated: July 2026
Next planned update: January 2027 (with the release of new tax data)