What does not change when you move
Income tax (Einkommensteuer), the solidarity surcharge (Solidaritätszuschlag), VAT (Umsatzsteuer) at 19% and 7%, pension, unemployment and care insurance rates are all federal. They are identical in every state. So are the contribution ceilings and the tax-free basic allowance.
Your registered address still matters administratively: it decides which tax office (Finanzamt) handles your file, which trade office (Gewerbeamt) registers your business, and how long you will wait for a tax number. Berlin is notoriously slower than most Bavarian offices. That is a queue, not a rate.
Church tax: 8% or 9%, depending on the state
Church tax (Kirchensteuer) is only charged if you are a registered member of a tax-collecting religious community, most commonly the Catholic or Protestant church. It is calculated as a percentage of your income tax, not of your salary, which makes it much smaller than the headline number suggests.
| Rate | Federal states |
|---|---|
| 8% | Baden-Württemberg, Bavaria (Bayern) |
| 9% | Berlin, Brandenburg, Bremen, Hamburg, Hesse (Hessen), Mecklenburg-Vorpommern, Lower Saxony (Niedersachsen), North Rhine-Westphalia (Nordrhein-Westfalen), Rhineland-Palatinate (Rheinland-Pfalz), Saarland, Saxony (Sachsen), Saxony-Anhalt (Sachsen-Anhalt), Schleswig-Holstein, Thuringia (Thüringen) |
On a €60,000 salary in tax class 1, income tax is around €9,389, so church tax is roughly €845 a year at 9% and €751 at 8%. Moving from Berlin to Munich would save you about €94 a year on this item alone — which is real money, but nowhere near enough to justify the move.
Leaving the church (Kirchenaustritt) removes the charge entirely. You declare it at a registry office or district court depending on the state, pay a small administrative fee, and the deduction stops from the following month. Note the consequences beyond tax: churches may decline religious weddings, funerals and godparent roles afterwards.
You are only registered for church tax if you stated a religion when you registered your address (Anmeldung). Many expats tick the box without realising it triggers a tax, then discover it on their first payslip.
Trade tax: set street by street
Trade tax (Gewerbesteuer) applies to businesses classified as a trade (Gewerbe), not to employees and not to freelance professionals (Freiberufler) such as doctors, lawyers, engineers, journalists and many independent software developers. If it applies to you, the amount depends on where your business is registered.
The calculation has three parts:
- Take your annual profit and subtract the allowance of €24,500, which sole traders and partnerships receive but corporations (GmbH, UG) do not.
- Multiply by the federal base rate (Steuermesszahl) of 3.5% to get the base amount (Steuermessbetrag).
- Multiply that by your municipality's multiplier (Hebesatz), which typically sits between 250% and 500%.
The multipliers below are the rates published by the largest cities in recent years. Councils can and do revise them, so confirm the current figure with your local Gewerbeamt before making decisions.
| City | Hebesatz | Effective trade tax on profit |
|---|---|---|
| Munich (München) | 490% | about 17.2% |
| Cologne (Köln) | 475% | about 16.6% |
| Hamburg | 470% | about 16.5% |
| Frankfurt am Main | 460% | about 16.1% |
| Düsseldorf | 440% | about 15.4% |
| Stuttgart | 420% | about 14.7% |
| Berlin | 410% | about 14.4% |
A handful of small towns compete for businesses with very low multipliers — Monheim am Rhein near Düsseldorf has run one of the lowest in the country for years. Before relocating a company for that reason, be aware that the tax office looks at where the business is genuinely managed from, not just the address on the letterhead.
One important relief keeps this from being as painful as it looks for sole traders: trade tax is largely credited against your personal income tax. Up to a multiplier of roughly 400%, the two broadly cancel out, so in Berlin a sole trader pays only a little more overall than a freelancer does. In Munich, at 490%, a meaningful residue remains uncredited.
Your health insurer, not your state
The health insurance surcharge (Zusatzbeitrag) is set by each insurance fund individually and applies nationwide, so switching from a fund charging 3.5% to one charging 2.6% changes your net pay immediately, wherever you live. The one regional wrinkle is the AOK, which operates as separate state-level funds with different rates.
Because employees split the surcharge with their employer, a 0.9 point difference on a €60,000 salary is worth roughly €270 a year to you. The self-employed, who pay the whole thing, save twice that.
So does moving to another state pay off?
For an employee, almost never. The only tax that changes is church tax, and only if you are a church member — under €100 a year at a typical salary. Rent, commuting costs and salary levels will dwarf it.
For a trade business with substantial profit, the picture is different. On €150,000 of profit the gap between a 410% and a 490% multiplier is several thousand euros a year before crediting. That is worth modelling properly with a tax advisor (Steuerberater) before you sign a lease.
See it in your own numbers. The German income tax calculator applies the correct church tax rate for whichever state you pick, so you can compare two states side by side in a few seconds.