Brutto income, literally translated as “gross income” in English, refers to the total earnings of an individual or business before any deductions such as taxes, social security contributions, or other expenses are subtracted.
What is “Brutto income”?
In the context of Germany, Brutto income is the total earnings of an individual from all sources including wages, salaries, bonuses, and other forms of compensation before any taxes and social security contributions are deducted. This is the figure commonly discussed when talking about salaries in Germany, and it is an important figure for tax calculations and loan applications[4][5].
More information about “Brutto income”
For individuals, Brutto income includes not just the basic salary but also other forms of income such as capital gains, rental income, and pensions. In the business context, Brutto income or gross profit is calculated as total revenues minus the cost of goods sold (COGS). It is crucial for understanding the financial health of a company and for individuals, it is the starting point for tax calculations[1].
Related to “Brutto income”
Here are some additional terms that are related to Brutto income:
- Netto incomeNetto income, or "Nettoeinkommen" in German, refers to the amount of money an individual takes home after all taxes and... More: The amount of money that remains after all taxes and social security contributions have been deducted from the Brutto income[4].
- LohnsteuerThe term "Lohnsteuer" translates to "wage tax" in English. It refers to the income tax that is deducted directly from... More: The German term for income tax, which is a percentage deducted from the Brutto income based on progressive tax rates[5].
- Sozialversicherungsbeiträge: Social insurance contributions in Germany, which include payments for pension, unemployment, health, and care insurance, and are typically split between the employer and employee[2].
Understanding Brutto income is essential for financial planning and navigating the tax system in Germany.