Splitting of income between spouses: Who benefits and who is harmed in the long term

The German tax splitting system for spouses (Gehängattensplitting) is almost as old as the Federal Republic of Germany itself: It has been an integral part of German tax law since 1958. It applies when married couples or registered civil partners file their tax returns jointly. The basic idea: Both incomes are added together, divided by two, and treated as if each partner earned half. Income tax is calculated on this half, and the result is then doubled. In practice, however, it primarily benefits couples with very different incomes.

When salaries differ significantly, splitting acts as a "smoothing mechanism." Because the tax rate in Germany increases with income, splitting results in the total income being taxed at a lower average rate.

Stefan Heine is a certified tax lawyer and CEO of smartsteuer. He is part of our EXPERTS Circle . The content represents his personal opinion based on his individual expertise.

An example of a married couple:

• A has 70,000 euros of taxable income per year
• B has 20,000 euros of taxable income per year
• This totals 90,000 euros

Without the splitting of income tax, A would pay approximately €18,500 in income tax, and B would pay approximately €1,600. This totals a tax burden of just under €20,100 without church tax and excluding special cases.

With spousal splitting, the total income of €90,000 is added together and divided by two. This is treated as if each person had €45,000 of taxable income. Each person is subject to €8,961 in income tax. The total income is therefore only €17,922.

The advantage of spousal splitting is therefore over 2,000 euros.

The greater the income difference, the greater the tax savings. Single-income households or constellations where one person works full-time and the other part-time are clearly among the winners.

The situation is quite different for couples with similar incomes. If both earn, for example, €45,000, that also results in a total income of €90,000. Dividing by two makes no difference here – both would have the same tax burden even if they were single. The advantage of splitting income is practically zero.

A recurring criticism is that people with lower incomes are subject to particularly high deductions due to tax class V. Statistically, these are mostly women, for which the part-time work rate is an important indicator; according to the Federal Statistical Office, 49 percent of women worked part-time in 2024 , compared to only 12 percent of men.

Due to the high deductions for those with lower incomes, comparatively little net income remains. The consequence: Additional working hours have little financial impact on disposable income. This, in turn, discourages many from increasing their working hours or even taking a job.

In the long term, this means that the person earning less also acquires fewer pension entitlements and has fewer opportunities to make their own retirement provisions.

And in the medium term, the person in tax class V will also receive less sickness benefit, parental allowance, short-time working allowance or unemployment benefit I due to their lower net earnings.

The advantages and disadvantages of spousal splitting are also known to lawmakers. Therefore, alternatives such as family splitting or individual taxation have been discussed for some time. These approaches, of course, also have advantages, but also disadvantages. Currently, if a couple does not wish to use spousal splitting, they can apply for individual taxation (although this usually results in a higher tax burden).

Otherwise, the burden can be distributed (somewhat) more fairly by choosing tax brackets; the factor method was introduced for this purpose. However, the choice of tax bracket combination only affects monthly net income and the associated social security benefits; the year-end tax return balances the total tax burden through any subsequent payment requests or refunds.

This article is from the EXPERTS Circle – a network of select experts with in-depth knowledge and many years of experience. The content is based on individual assessments and is aligned with the current state of science and practice.