Payroll in Germany is not complicated so much as unforgiving. The rates are published, the deadlines are fixed, and the arithmetic is the same for everybody. What catches foreign employers out is that gross salary is roughly four fifths of what the employee actually costs, and that several of the inputs changed on 1 January 2026.
This page sets out the 2026 contribution rates and ceilings, works a full employer cost from a gross salary, and covers what you have to file and when.
Rates and thresholds checked for 2026. The 2027 minimum wage and minijob limit are already fixed and shown as such. The 2027 social insurance rates and ceilings are not yet set.
What an employee actually costs
Worked at €4,000 a month gross. The assumptions matter, so they are stated first: an employee outside Saxony, in statutory health insurance, earning below all applicable contribution ceilings, with the officially published 2026 average supplementary health contribution of 2.9%. An individual’s actual health fund rate will differ.
| Employer contribution | Rate | On €4,000 gross |
|---|---|---|
| Statutory pension | 9.3% | €372.00 |
| Unemployment | 1.3% | €52.00 |
| Health, including half of the 2.9% average supplement | 8.75% | €350.00 |
| Long-term care, outside Saxony | 1.8% | €72.00 |
| Four main employer contributions | 21.15% | €846.00 |
| Insolvency levy | 0.15% | €6.00 |
| Statutory accident insurance | Variable | Depends on your accident insurance institution, wage bill and risk class |
| U1 and U2 levies | Variable | Depends on the health fund and reimbursement option. U1 applies to smaller employers, U2 more broadly |
So €4,000 gross is at least €4,852 before accident insurance and the levies that vary. Adding those typically brings the loaded figure to somewhere near €4,900 to €5,000, which is where the rule of thumb that gross is about four fifths of total cost comes from. There is no universal percentage, and anyone quoting one is estimating.
Contribution rates and ceilings for 2026
| Contribution | Total | Employer | Employee | 2026 ceiling |
|---|---|---|---|---|
| Statutory pension | 18.6% | 9.3% | 9.3% | €8,450/month, €101,400/year |
| Unemployment | 2.6% | 1.3% | 1.3% | €8,450/month, €101,400/year |
| Health, general rate | 14.6% | 7.3% | 7.3% | €5,812.50/month, €69,750/year |
| Supplementary health contribution | Set by each fund. 2026 published average 2.9% | Half the fund’s rate | Half the fund’s rate | €5,812.50/month, €69,750/year |
| Long-term care, outside Saxony | 3.6% | 1.8% | 1.8% | €5,812.50/month, €69,750/year |
| Long-term care, childless employee, outside Saxony | 4.2% | 1.8% | 2.4% | €5,812.50/month, €69,750/year |
| Long-term care, Saxony | 3.6% | 1.3% | 2.3% | €5,812.50/month, €69,750/year |
The childless surcharge is an employee cost, not an employer one. The extra 0.6 percentage points on long-term care are paid by the employee alone, generally from age 23 and subject to statutory exceptions. Outside Saxony the employer still pays 1.8%. It changes the payslip and the net pay, not your contribution.
In the other direction, employees with two or more qualifying children under 25 get an employee-side reduction of 0.25 percentage points for each child from the second to the fifth. That also does not change the employer share.
One threshold that gets confused with the ceilings: the level at which an employee may leave statutory health insurance for private cover is a separate figure, €77,400 a year or €6,450 a month in 2026. That is not the same as the €69,750 contribution ceiling.
What is rising, and when
Three things moved on 1 January 2026, and two of them move again in 2027. All are already decided.
The statutory minimum wage. €13.90 an hour from 1 January 2026, rising to €14.60 from 1 January 2027. The Minimum Wage Commission decided both steps on 27 June 2025. That is 8.42% then a further 5.04%, 13.88% across two years, measured from €12.82.
The minijob earnings limit, automatically. Because it is tied to the minimum wage, it rose to €603 a month and goes to €633 in 2027. Employers who treat minijobs as a fixed budget line are the ones this surprises.
The contribution ceilings. The pension and unemployment ceiling went from €8,050 to €8,450 a month. The cabinet adopted the 2026 values on 8 October 2025 and the Bundesrat approved them on 21 November 2025, based on 5.16% wage growth during 2024. A higher ceiling means contributions are charged on a larger slice of a senior employee’s pay, so the effect is concentrated on earnings that previously sat above the old ceiling.
Wage tax and ELStAM
Wage tax is withheld monthly and remitted by the employer. The amount depends on the employee’s tax class, which reflects marital status and household circumstances, alongside allowances and church tax status where applicable.
The employer does not choose or assign the tax class. You retrieve the employee’s official wage-tax characteristics, including the class, electronically through ELStAM using their tax identification number. That is a retrieval step in onboarding, not a decision, and getting it wrong produces incorrect withholding that has to be unwound.
What you have to file
German payroll runs on a fixed monthly rhythm with two separate reporting streams, and they do not share a deadline.
- Wage tax return to the tax office. Filed electronically, monthly for most employers, with quarterly or annual filing where the prior year’s wage tax was low enough
- Social contributions to the employee’s health fund, which collects for all branches. These are due before month end, on an estimated basis if final figures are not yet available, with the correction carried into the following month
- Registrations and deregistrations for each employee joining or leaving, plus annual reporting
- Accident insurance reporting to your accident insurance institution
The deadlines are the part that trips up foreign employers, because the social contribution is due before the month it relates to has finished being calculated.
Minijobs and midijobs
A minijob is not simply a small job. It has its own contribution regime and the ordinary rates above do not apply to it.
For a commercial minijob in 2026 the employer generally faces flat-rate contributions rather than the standard split: broadly 13% for health insurance, 15% for pension, the 0.80% U1 and 0.22% U2 levies, the 0.15% insolvency levy, and a possible 2% flat-rate tax, plus accident insurance. The employee normally contributes 3.6% to pension unless they apply for exemption. These figures are worth checking against the Minijob-Zentrale’s own table before you rely on them, because the combination depends on the arrangement.
Above the minijob limit sits the midijob transition range, €603.01 to €2,000 a month in 2026, where employee contributions are calculated on a sliding formula rather than the flat rates. A midijob is not an ordinary employment with a smaller salary, and treating it as one produces wrong deductions.
Leave and sick pay, as payroll inputs
Annual leave. The statutory minimum is 24 working days, expressed on the Act’s six-day week. For a five-day week that is the same entitlement expressed as 20 days. It is one minimum stated two ways, not a range, and most employers contract above it.
Working time. The default is eight hours a working day. It can go to ten, provided the average returns to eight over six calendar months or 24 weeks. Weekly limits follow from that rather than from a separate weekly cap.
Sickness. Employees must notify incapacity and its expected duration promptly. Medical certification is generally required where incapacity lasts more than three calendar days, and the employer may require it sooner. Since January 2023 most statutorily insured employees no longer hand over a paper certificate: the employer retrieves the electronic certificate directly. Exceptions remain, including for privately insured employees.
Where employers get this wrong
Budgeting on gross salary.
The four main employer contributions are 21.15% before accident insurance and the levies. A budget built on gross is roughly a fifth short.
Assuming the minijob ceiling is fixed.
It is tied to the minimum wage and moves with it. It rose to €603 this year and goes to €633 next year without anyone announcing it as a minijob change.
Treating the childless surcharge as an employer cost.
It is deducted from the employee. It affects your payroll administration and their net pay, not your contribution.
Confusing the contribution ceiling with the private insurance threshold.
€69,750 caps the contribution base for health and long-term care. €77,400 is the separate level at which an employee may opt out of statutory health insurance.
Forgetting Saxony.
The long-term care split differs there: 1.3% employer and 2.3% employee. One employee in Dresden is enough to make a single national rate wrong.
How NNRoad supports this
NNRoad runs payroll in Germany for companies with a German entity, handling the monthly calculation, the wage tax return, contribution reporting and the registrations attached to joiners and leavers. Where there is no German entity, our Employer of Record arrangement puts the employment relationship with us.
We administer payroll. We are not German tax advisers, and questions about an individual’s tax position, insurance status or the right treatment of a particular arrangement belong with a Steuerberater.
Costing a hire in Germany?
Tell us the gross salary, the location and whether you have a German entity. We will give you the loaded cost and the reporting calendar you would be taking on.
Quick FAQs
What are the employer social contributions in Germany in 2026?
Pension 9.3%, unemployment 1.3%, health 7.3% plus half of the employee’s fund supplement, and long-term care 1.8% outside Saxony. Using the published 2026 average supplement of 2.9%, that comes to 21.15% of contributory pay, before accident insurance, the 0.15% insolvency levy and any U1 or U2 levies.
What does an employee cost on top of salary?
Around a fifth more, before the variable items. At €4,000 gross the four main contributions are €846 and the insolvency levy €6, so at least €4,852 before accident insurance and levies. There is no single universal loading percentage.
What is the German minimum wage in 2026?
€13.90 an hour, rising to €14.60 on 1 January 2027. Both steps were decided in June 2025.
What is the minijob limit in 2026?
€603 a month, rising to €633 in 2027. It is linked to the minimum wage and moves automatically with it.
Who decides an employee’s tax class?
Not the employer. The class is part of the official wage-tax characteristics you retrieve electronically through ELStAM using the employee’s tax identification number.
Do employer contributions rise for higher earners?
Up to the ceilings, yes, and the ceilings rose for 2026. Above them contributions stop, so the increase affects the band between the old and new ceiling rather than every senior salary equally. Private health insurance cases work differently again.
Can we run German payroll without a German entity?
Not as the employer of record in the ordinary sense. Either you establish an entity and run payroll through it, or a third party employs the person and you contract with them.