Wage tax is deducted from wages. Wages are all income that accrues to the employee from the employment relationship or from a previous employment relationship. Income includes not only cash remuneration, but also remuneration in kind (e.g. board and lodging) and other non-cash benefits (e.g. private use of a company car). It does not matter whether the income is one-off or ongoing or whether there is a legal entitlement to it. It is also irrelevant under what name or in what form the income is granted.
The wage tax is assessed on the salary in such a way that it corresponds to the income tax that the employee would owe if he or she earned income exclusively from employment.
To make it easier for the employer to calculate the tax, employees are placed in different tax classes according to their marital status. The respective tax class determines whether the basic income tax rate (tax classes I, II, IV) or the income tax splitting rate (tax classes III, V) is to be applied and which allowances and lump sums are to be taken into account. These are the employee lump sum of 1,000 euros per year (tax classes I to V), the special expenses lump sum (tax classes I to V), the pension lump sum (tax classes I to VI) and the relief amount for single parents of 4,008 euros per year (tax class II).