Taxing a severance: the Fünftelregelung now works only at assessment

How is a severance taxed in 2026?

In full. Under § 24 no. 1 EStG a severance is compensation for earnings that will now not arrive, and therefore taxable income; the allowance that once existed for it was withdrawn in 2006. It is withheld as a one-off payment, by the same annual projection as a Christmas bonus, only with no relief at all.

Of the severance, €35,668.99 reaches the account in this example. The difference from the column beside it is pure progression: the severance sits on top of the annual salary, and from €69,879 of taxable income the marginal rate is 42.0%. No social contributions are included, because a severance carries none.

What changed about the Fünftelregelung?

It has left the wage-tax deduction. Article 5 of the Wachstumschancengesetz repealed § 39b(3) sentences 9 and 10 EStG, and article 35 brought the change into force on 1 January 2025. The employer has not been allowed to apply the relief since, however willing.

Three documents show it. The text of the Act in the Bundesgesetzblatt; the present wording of § 39b(3) EStG, which ends at sentence 8; and the federal finance ministry’s calculation program for 2026. That program is what every payroll run of the year executes, and it holds no step for a tariff reduction.

How do I get the Fünftelregelung now?

Through the income-tax return. The tax office applies § 34(1) EStG at assessment, and in this case an assessment happens only if it is requested: it is a request under § 46(2) no. 8 EStG rather than an obligation to file.

In practice that is a shift in the calendar. The over-withheld wage tax sits with the tax office between the payment and the assessment notice, and the later in the year the severance falls, the longer it sits there. The size of the relief is unaffected.

How does the Fünftelregelung calculate?

In the four steps § 34(1) sentence 2 EStG prescribes.

1. First the income tax on taxable income without the severance is calculated.
2. Then the same calculation, with one fifth of the severance added.
3. The difference between the two amounts is the tax on that one fifth.
4. That amount times five is the tax on the whole severance.

The relief requires income to genuinely concentrate: the severance together with the rest of the year’s earnings must exceed what would have been earned without the termination. Whether that holds is decided by the tax office case by case. This page is not tax advice.

The solidarity surcharge follows the tax so calculated and starts only above a threshold of €20,350 of assessed tax. Church tax, for members, is likewise levied on the tax calculated.

Does a severance carry social contributions?

No. A genuine severance compensates the loss of the job rather than work performed. It is therefore not wages within the meaning of § 14 SGB IV, and stays free of contributions in all four branches.

It is different where the payment in fact settles outstanding wages, unpaid salary or untaken holiday. Amounts like those are wages and carry contributions, whatever the termination agreement calls them.

Does a severance reduce unemployment benefit?

It is not reduced, but it can be suspended. Under § 158 SGB III the claim is suspended where the severance was paid in connection with a termination that did not observe the notice period, at most until the day the employment would have ended had the period been observed, and for no more than a year. Where the period was observed the rule does not apply.

What this calculator does with a severance

It does not compute one. For severance payments the calculator shows an explicit boundary state, because the outcome depends on the concentration of income, on the rest of the year’s earnings and on when the payment falls. A silent assumption about those would produce a figure nobody can check.

The calculation above assumes a full calendar year with one employer, tax class I in North Rhine-Westphalia with no church-tax liability, the severance and the salary in the same calendar year, and no Fünftelregelung, because the wage-tax deduction no longer knows it. These are the assumptions the calculator itself starts with.

Sources

Every rule on this page comes from one of the documents below. Each link goes to the publishing text rather than to a summary of it, and all of them were read on August 16, 2026.