Germany Sole trader (commercial) tax calculator 2026
A German commercial sole trader (Gewerbe) in 2026 pays progressive income tax: 0% up to €12,348, then 14% to €17,500, 24% to €68,480, 42% to €277,825, and 45% above. Add Gewerbesteuer at about 3% net on profit over the €24,500 allowance, plus roughly 19% for health and care.
This calculator estimates the total 2026 tax bill for a German commercial sole trader (Gewerbe), combining progressive income tax, net Gewerbesteuer (trade tax) above the €24,500 allowance, and health and care contributions.
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Result
Germany Sole trader (commercial) tax rates 2026
| Band or item | Rate |
|---|---|
| Up to €12,348 | 0% (tax free) |
| €12,348 to €17,500 | 14% |
| €17,500 to €68,480 | 24% |
| €68,480 to €277,825 | 42% |
| Over €277,825 | 45% |
| Trade tax (on net, after allowance) | 3% (allowance €24,500) |
| Social contributions (Health + care (~19%)) | 19% |
Source: taxsummaries.pwc.com
How is a German Gewerbe taxed in 2026?
A commercial sole trader in Germany reports business profit as personal income, so it is taxed under the same progressive income tax schedule as employment income. For 2026 the bands used here are:
- Up to €12,348: 0% (tax-free basic allowance)
- €12,348 to €17,500: 14%
- €17,500 to €68,480: 24%
- €68,480 to €277,825: 42%
- Above €277,825: 45%
These are marginal rates, so each portion of profit is taxed only at the rate for its band. On top of income tax, a Gewerbe is subject to Gewerbesteuer (trade tax), which employees and freelancers do not pay.
Gewerbesteuer and the €24,500 allowance
Gewerbesteuer applies only to trade profit that exceeds a €24,500 allowance available to sole traders and partnerships. The headline (gross) trade-tax burden is roughly 14-17% depending on the municipal multiplier (Hebesatz), but the crucial point is the credit under §35 EStG: most of the Gewerbesteuer paid is credited back against your personal income tax. Because of that offset, this calculator models the trade tax at about 3% net on the amount of profit above €24,500, which reflects the residual cost after the credit rather than the gross rate.
Health and care contributions
Unlike employees, a self-employed Gewerbe owner is generally responsible for their own health and long-term care insurance, and typically pays the full premium rather than splitting it with an employer. This calculator estimates those combined health and care contributions at about 19% of profit. If you are already covered through another arrangement, such as family insurance or a separate scheme, you can switch contributions to 0% so only income tax and Gewerbesteuer are estimated.
Worked example: €60,000 profit
Take a Gewerbe with €60,000 of annual profit:
- Income tax: 0% on the first €12,348; 14% on €5,152 (€12,348 to €17,500) = €721; 24% on €42,500 (€17,500 to €60,000) = €10,200. Total income tax is about €10,921.
- Gewerbesteuer (net): profit above the allowance is €60,000 - €24,500 = €35,500, at 3% net = about €1,065.
- Health and care (~19%): 19% of €60,000 = about €11,400.
Total estimated burden is roughly €23,386, leaving about €36,614 net. Lowering profit below €24,500 removes the Gewerbesteuer entirely, and profit under €12,348 is free of income tax.
Frequently asked questions
How much tax does a German Gewerbe sole trader pay?
A German commercial sole trader (Gewerbe) pays progressive income tax from 14% (above the €12,348 tax-free allowance) up to 45%, plus Gewerbesteuer estimated at 3% net on profit above the €24,500 trade-tax allowance, plus roughly 19% for health and care insurance.
What is the tax-free allowance for a sole trader in Germany in 2026?
Income up to €12,348 is taxed at 0%. Income tax then applies at 14% on the next band up to €17,500, 24% up to €68,480, 42% up to €277,825, and 45% above that.
How does Gewerbesteuer (trade tax) work for a Gewerbe?
Gewerbesteuer applies only to trade profit above a €24,500 allowance. Although the gross rate is roughly 14-17%, most of it is credited back against income tax under §35 EStG, so this calculator estimates it at about 3% net on the amount over €24,500.
Do German sole traders pay social security contributions?
Commercial sole traders are generally not in the statutory pension system, but they must cover health and long-term care insurance, estimated here at about 19% of profit. If you are already covered (for example via a spouse or another scheme), you can set contributions to 0%.
What income tax rate applies at €60,000 profit?
At €60,000 profit the top marginal income tax rate is 24% (the band running from €17,500 to €68,480). The average income tax is lower, around €10,921, because the first €12,348 is tax-free and the €12,348-€17,500 band is taxed at only 14%.
When does the 42% and 45% rate start in Germany?
The 42% income tax rate starts on taxable income above €68,480, and the top 45% rate applies to income above €277,825. Both apply on a marginal basis, so only the portion within each band is taxed at that rate.
Official sources
- Bundeszentralamt für Steuern — Corporate & personal income tax