Current for 2026•As of: July 2026

Severance Pay Calculator 2026 One-Fifth Rule & Net.

Calculate your net severance pay with the one-fifth rule (§34 EStG) – tax classes 1–6, church tax, gross-net comparison

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0 EUR200,000 EUR
0 EUR500,000 EUR
Lump-sum allowance (€1,230) €10,000
0 6

Annual gross is estimated from monthly gross × 12 — please adjust for special payments.

In force since 2025:

The one-fifth rule no longer applies to the wage tax deduction. Your employer initially withholds the full tax on the severance. You receive the more favourable taxation under the one-fifth rule via your income tax return.

Net severance (one-fifth rule)

€20,295.00

of €30,000.00 gross

Saving through the one-fifth rule

+€1,244.00

4.15% more net

Taxation comparison

Regular taxation

Tax on severance

-€10,949.00

Net severance

€19,051.00

One-fifth rule (§34 EStG)Cheaper

Tax on severance

-€9,705.00

Net severance

€20,295.00

Deductions on severance (one-fifth rule)

Income tax (one-fifth rule)-€9,705.00
Solidarity surcharge-€0.00
Church tax-€0.00
Total deductions-€9,705.00
Gross severance€30,000.00
Income tax-€9,705.00
Solidarity surcharge-€0.00
= Net severance€20,295.00

Calculation basis: Taxable income (without severance): €38,984.00

The one-fifth rule calculates: tax on (taxable income + 1/5 severance) - tax on taxable income = €1,941.00, then × 5 = €9,705.00

Important note

These calculations are for non-binding information only and do not replace professional tax advice. All information without guarantee. Learn more

Sources & calculation basis

Our calculations are based on the following official sources (as of: July 2026):

What is the one-fifth rule?

The one-fifth rule under §34 EStG is a tax relief for extraordinary income such as severance payments. Because our progressive tax system applies higher tax rates to higher incomes, a one-off large severance payment would be taxed particularly heavily.

The one-fifth rule softens this progression: the tax is calculated as if the severance had been paid out evenly over 5 years. As a result, a smaller part of the severance moves into higher tax brackets.

Advantages of the one-fifth rule

Tax saving
Up to several thousand euros less tax thanks to reduced progression
Exempt from social security
No contributions to health, pension or unemployment insurance
Automatic check
The tax office applies the one-fifth rule automatically if it is more favourable
Possible retroactively
Can also be claimed for past years via the tax return

How the one-fifth rule is calculated

Example: €30,000 severance on €45,000 annual income

Example: €30,000 severance on €45,000 annual income
PositionBetrag
Regular annual income€45,000
Severance pay€30,000
1/5 of the severance€6,000
Tax on €45,000€5,657
Tax on €51,000 (+ 1/5)€7,514
Difference × 5€9,285
Tax on severance (one-fifth rule)€9,285

For comparison: Without the one-fifth rule, the severance would be taxed at your regular marginal tax rate of approx. 40% – that would be around €10,531 in tax. With the one-fifth rule, you save over €1,200 in this example.

Anyone who receives outstanding overtime paid out in the year of termination should note that this counts as regular salary within the annual income and thus increases the progression in the severance calculation. The net payout of the overtime can be determined separately.

Factors that affect your tax saving

  1. Amount of the severance: The higher the severance, the greater the progression effect and thus the saving
  2. Regular annual income: With a low base income, the effect is often smaller
  3. Tax class: Married people in tax class 3 benefit differently than singles in tax class 1
  4. Child allowances: Reduce the tax burden additionally and affect the solidarity surcharge
  5. Church tax: 8-9% of the wage tax, increases the overall burden

Severance calculator by tax class 1, 3 and 4

The chosen tax class determines the initial tax rate at which your regular income and the severance are assessed. Our severance pay calculator takes your tax class into account in the calculation – simply choose your actual tax class for a realistic result.

Differences between tax classes for the severance

Tax class 1
For singles, divorced and widowed people without children. The basic tax-free allowance applies (2026: €12,084) without spousal splitting.
Tax class 3
For married people whose partner is in tax class 5 or has no income of their own. The splitting advantage of joint assessment only takes effect via the tax return since the one-fifth rule was removed from the wage tax deduction (from 2025).
Tax class 4
For married couples with roughly equal incomes. Treated similarly to tax class 1 for the wage tax deduction – the splitting advantage from joint assessment likewise only shows up in the tax return.

Important change from 2026

From 1 January 2026, the one-fifth rule will no longer be applied to the monthly wage tax deduction by the employer. This means:

What changes

Full wage tax
Your employer initially withholds the full wage tax on the severance
Tax return required
You only receive the tax relief via your income tax return
Time delay
Plan for the refund in time (approx. 6-12 months after filing)
Liquidity planning
You have to pre-finance the higher tax at first

Frequently asked questions about severance pay

Key facts on the one-fifth rule and severance taxation

The one-fifth rule (§34 EStG) is a tax relief for extraordinary income such as severance payments. The tax is calculated as if the severance had been paid out over 5 years. This softens the progression and reduces the tax burden.

From 2026, the one-fifth rule no longer applies to the wage tax deduction. The employer initially withholds the full tax on the severance. You only receive the tax relief under the one-fifth rule via your income tax return as a refund.

The net severance is the gross severance minus wage tax, the solidarity surcharge and, where applicable, church tax. Social security contributions do not apply to severance payments. Our severance pay calculator 2026 automatically computes both scenarios: regular taxation and taxation with the one-fifth rule, so you can see the tax saving immediately.

The tax class affects the initial tax rate used for the one-fifth-rule calculation. In tax class 1, the basic tax-free allowance applies (2026: €12,084) without splitting. Married people in tax class 3 benefit from spousal splitting, which often reduces the tax on the severance considerably. Choose your actual tax class in the severance calculator for an accurate result.

No, a genuine severance payment is exempt from social security. There are no contributions to health, pension, unemployment or long-term care insurance. Deductions only apply to wage tax, the solidarity surcharge and, where applicable, church tax.

As a rule of thumb: 0.5 monthly salaries per year of employment. With 10 years of service and a monthly salary of €4,000, that would be €20,000. The actual amount is a matter of negotiation.

The one-fifth rule is only applied when the severance leads to an "accumulation of income" – that is, when the total income in the severance year is higher than it would be without the termination. For small severance payments, or if you did not work at all during the year, it may not apply.

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