Redundancy Tax Calculator 2026
Calculate your net redundancy payout in Germany with calculation of tax reductions under the official one-fifth rule.
Redundancy payouts in Germany are exempt from social security contributions, but are fully subject to income tax. Our calculator automatically applies the beneficial tax calculation method according to § 34 EStG.
What is the one-fifth rule for redundancy payments?
A redundancy payment in Germany is taxed beneficially as an "extraordinary income" (§ 34 EStG). The one-fifth rule protects you from high progressive tax brackets.
How is it calculated?
- Income tax is first calculated on your regular salary.
- One-fifth of the redundancy payment is added to calculate the tax difference.
- The tax difference is multiplied by 5 to determine the final tax amount.
Frequently Asked Questions (FAQ)
Are redundancy payments subject to social security?
No. Redundancy payments paid as compensation for the loss of a job are not considered earnings under social security law in Germany. Thus, 0% contributions apply.
When is the one-fifth rule particularly beneficial?
The tax savings from the one-fifth rule are higher if your regular taxable income in the year of payout is relatively low compared to your tax bracket.