For employees and employers

Severance pay in Germany 2026: gross and net

With a dismissal for operational reasons and a severance offer under section 1a KSchG, severance is 0.5 months’ pay per year of service. Severance is free of social security but taxable.

Your details

0.5 = standard amount under section 1a KSchG. Negotiations and social plans often give more.
Determines the church tax rate (8% in Bavaria and Baden-Württemberg, 9% elsewhere) and long-term care in Saxony.
Severance payValues 2026

Result

Severance gross–
Severance net (withholding)–
Income tax, solidarity surcharge and church tax on it–
Years of service (rounded)–

Explanation

There is no general statutory right to severance. Section 1a KSchG applies when the employer dismisses for operational reasons, offers severance in the notice and you do not challenge the dismissal in court. We calculate the withholding with the 2026 PAP as compensation in the month of payment (assumption: expected annual pay 12 × monthly earnings). The final tax follows from your income tax return.

Note: an indication, not legal or tax advice

This calculation is based on the general statutory rules and the values published for 2026. It is not legal, tax or payroll advice. Collective agreements, employment contracts and works agreements may provide more favourable rules.

Sources and values used

ItemValueSource
Amount under section 1a KSchG0.5 months’ pay per year; more than 6 months = full yearKündigungsschutzgesetz, § 1a (in German)
Monthly earningsmoney and benefits in kind in the last month (section 10(3) KSchG)Kündigungsschutzgesetz, § 10 (in German)
Taxcompensation, non-recurring payment; one-fifth rule only in the tax returnEStG, § 34 (Fünftelregelung) (in German)
Social securityfree of contributions (compensation for losing the job)EStG, § 24 (Entschädigungen) (in German)
Income tax and solidarity surchargeofficial 2026 algorithmBMF – Programmablaufplan 2026 für die maschinelle Lohnsteuerberechnung (XML-Pseudocode Lohnsteuer2026, Version 1.0, Stand 23.10.2025) (in German)
Church tax8% (BY, BW) or 9% of income taxEKD – Kirchensteuer: Hebesatz 8 % (Bayern, Baden-Württemberg) bzw. 9 % der Lohn- und Einkommensteuer (in German)
Further sourceBMF – Schnittstelle des Lohn- und Einkommensteuerrechners (Prüfung: 234 Fälle, 2.808 Werte, 0 Abweichungen) (in German)

Sources checked on 15 October 2026.