Guide
Income tax for the self-employed
Information only · figures are 2026 · no guarantee
As a freelancer in Germany you pay income tax (Einkommensteuer) on your profit, not your turnover — and you pay it in instalments during the year, then settle up with an annual return. The tariff is progressive, so the rate climbs as profit rises. Here is how the pieces fit together for 2026.
Step 1 — Work out your taxable profit (EÜR)
Your tax is based on profit: income minus business expenses. Most freelancers calculate this with the Einnahmen-Überschuss-Rechnung (EÜR), a straightforward cash-basis method — you add up what you received and subtract what you spent on the business (software, equipment, travel, professional fees and so on). You do not need double-entry bookkeeping for this; the EÜR is filed as an attachment to your annual return.
Step 2 — Apply the 2026 tariff
The German income-tax tariff is progressive and starts with a tax-free allowance:
- The first €12,348 of taxable income is tax-free — the Grundfreibetrag.
- Above that, the rate rises progressively, starting at 14 % and climbing to 42 %.
- The 42 % rate is reached from €69,879 of taxable income.
- A top rate of 45 % (the "Reichensteuer") applies above €277,826.
Because the rate changes across bands, the tax on a given profit is not obvious at a glance. To get an estimate for your own figure, try the German Einkommensteuer-Rechner.
Step 3 — Quarterly prepayments (Vorauszahlungen)
You do not wait until year end to pay. Once the Finanzamt has an idea of your earnings, it sets quarterly Vorauszahlungen — prepayments due in March, June, September and December. These are estimates based on your last known profit; if your income changes a lot, you can ask the tax office to adjust them up or down so you are not badly over- or under-paying.
Step 4 — The annual return via ELSTER
After the year ends you file your Einkommensteuererklärung (annual income-tax return) electronically through ELSTER, the tax authority's online portal. The return reconciles the prepayments you already made against your actual profit: if you paid too much you get a refund, if you paid too little you owe the balance. The EÜR profit calculation goes in with it.
Trade tax (Gewerbesteuer) — only for a Gewerbe
There is one more tax to know about, and whether it applies depends on your status. A Freiberufler (genuine liberal profession) pays no trade tax. A Gewerbe (commercial business) does pay Gewerbesteuer to its municipality — though a tax-free allowance applies, and for many small operators a large part of it is credited back against income tax. Which category you fall into is decided by the Finanzamt, and it is worth confirming early.
Frequently asked
What is the EÜR method?
The Einnahmen-Überschuss-Rechnung is the simple cash-basis profit calculation most freelancers use: total income received minus business expenses paid. The resulting profit is what your income tax is based on. You file it as an attachment to your annual return through ELSTER.
Do I pay tax in one lump sum at year end?
Usually not. Once the Finanzamt knows roughly what you earn, it sets quarterly prepayments (Vorauszahlungen) due in March, June, September and December. Your annual return then reconciles those prepayments against the final figure, and you either top up or get a refund.
Do freelancers pay trade tax?
Genuine Freiberufler (liberal professions) do not pay trade tax. A commercial business (Gewerbe) does pay Gewerbesteuer, though a tax-free allowance applies and much of it is credited against income tax for many small operators. Whether your work counts as freiberuflich is decided by the Finanzamt.
Legal basis: § 32a EStG (income-tax tariff) · § 4 Abs. 3 EStG (EÜR profit method) · § 37 EStG (prepayments) · Gewerbesteuergesetz (trade tax). Figures shown are for 2026. Estimate with the Einkommensteuer-Rechner.