US Expat Taxes in Germany: Complete 2025 Guide for Americans
- What US Expats Need to Know About Taxes in Germany
- How Much Tax Do Expats Pay in Germany?
- Tax Deadlines in Germany and the U.S.
- German Tax System Basics for US Expats
- Dual Tax Compliance Strategy
- Common Expat Scenarios
- Banking and Financial Considerations
- Common Mistakes to Avoid
- Your Action Plan
- FAQs About Expat Taxes in Germany
- Tax Compliance for US Expats in Germany
If you’re a U.S. citizen living in Germany, you may be required to file tax returns in both countries—even if you already pay taxes in Germany. The good news? U.S. tax law offers ways to avoid double taxation through the strategic use of the Foreign Earned Income Exclusion, allowing you to exclude up to $130,000 for tax year 2025, and the U.S.-Germany tax treaty.
Here’s encouraging news from Greenback’s 2025 Expat Trends Survey: Despite tax complexities, the vast majority of American expats successfully manage their dual filing obligations and continue building lives abroad. Among the expats surveyed across multiple countries, most have found effective strategies to navigate both US and local tax requirements without major disruptions to their overseas lifestyle.
What US Expats Need to Know About Taxes in Germany
Germany’s progressive tax rates range from 14% to 42%, and with proper planning, you can dramatically optimize your tax burden. This guide transforms the seemingly complex German-US tax maze into a clear, actionable roadmap.
In this guide, we’ll explain:
- Who needs to file U.S. taxes while living in Germany
- How Germany’s tax system works
- What forms to file and when
- How to reduce or eliminate your U.S. tax bill
Let’s break it down.
Do I Have to Pay U.S. Taxes If I Live in Germany?
Yes, the United States taxes its citizens and green card holders on worldwide income. If your income exceeds certain thresholds, you’ll need to file a U.S. federal tax return—even while living abroad.
U.S. Filing Thresholds (2025):
| Filing Status | Minimum Income to File |
| Single | $13,850 |
| Married Filing Jointly | $27,700 |
| Self-Employed | $400 |
You may also need to file:
- FBAR (FinCEN 114): if your foreign accounts exceed $10,000
- FATCA (Form 8938): if your foreign assets exceed certain thresholds
What Are the Taxes in Germany?
Germany uses a progressive tax system, with higher earners paying more. As a tax resident, you’re taxed on your worldwide income, just like in the U.S.
2025 German Income Tax Brackets:
According to PwC’s official tax summaries, Germany has progressive tax rates ranging as follows (2025 tax year): Geometrically progressive rates start at 14% and rise to 42%.
| Income Range (EUR) | Tax Rate |
| Up to €11,604 | 0% |
| €11,605–€66,760 | 14–42% |
| €66,761–€277,825 | 42% |
| Over €277,826 | 45% |
Other taxes:
- Solidarity surcharge: 5.5% solidarity surcharge tax. As of 1 January 2021, the application of the solidarity surcharge tax has been substantially reduced. In general, no solidarity surcharge is levied any longer for individuals filing separately and having an income tax burden of not more than EUR 19,950
- Church tax: 8–9%, depending on your federal state
- Capital gains tax: 25%
- VAT (sales tax): 19% standard, 7% reduced (on essentials like food/books)
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How Much Tax Do Expats Pay in Germany?
Most U.S. expats pay more in German taxes than they owe to the IRS, but filing both returns is still required. The U.S. offers tools to reduce or eliminate your IRS tax bill:
- Foreign Tax Credit (Form 1116): Dollar-for-dollar credit for taxes paid in Germany to offset tax liabilities
- Foreign Earned Income Exclusion (Form 2555): Excludes up to $130,000 in tax year 2025 of foreign-earned income
- Foreign Housing Exclusion: If you rent in Germany
Germany vs. U.S. Tax Rates
Compared to the U.S., Germany has:
- Higher base rates for middle-income earners
- No joint filing benefits
- Mandatory public health insurance and social security contributions
However, German taxes fund more public services like healthcare, education, and transit.
How to Avoid Double Taxation
The U.S.-Germany Tax Treaty and IRS rules help prevent you from paying taxes twice on the same income.
You can:
- Claim a Foreign Tax Credit on your U.S. return to offset tax liabilities
- Use the FEIE if you meet the physical presence or bona fide residence test
- Benefit from the U.S.-Germany Totalization Agreement (avoids paying into both countries’ social systems)
The saving clause (essentially) provides that, despite any information provided in the treaty, both countries reserve the right to tax certain citizens and residents as they would otherwise tax them under the general tax principles of their respective countries. This means U.S. citizens must still report their German income to the IRS, but can use Foreign Tax Credits for German taxes paid.
Real Example: Sarah, a software developer in Berlin, reports her German income to the IRS due to the savings clause but uses Foreign Tax Credits for German taxes paid, often eliminating US tax liability entirely.
The treaty’s main benefit comes through foreign tax credits rather than exemptions. Higher German taxes typically reduce or eliminate US obligations on the same income.
Tax Deadlines in Germany and the U.S.
- U.S. deadline: April 15 (automatic extension to June 15 for expats)
- Germany: July 31 of the following year (extensions available if you use a tax advisor)
Late on U.S. Filings? There’s Help.
If you haven’t filed your U.S. taxes in years, the IRS Streamlined Filing Compliance Procedures may help you catch up without penalties.
To qualify, you must:
- Have lived outside the U.S. for at least 330 days in a tax year
- Not have willfully avoided filing
German Tax System Basics for US Expats
Tax Residency Rules
Anyone with a German dwelling or staying more than six months becomes a tax resident, triggering worldwide income taxation. Most Americans on long-term visas automatically qualify as German tax residents.
2025 German Tax Brackets
Thanks to the increased tax-free allowance of over €12,000 in 2025, individuals earning €10,000 will pay no income tax, while those at €20,000 will see an average tax rate of just 2.59%.
For instance, someone earning €45,358—close to the average German salary—will pay only about 13.14% in income taxes.
Additional Taxes
- Solidarity Surcharge: 5.5% eliminated for most middle-income earners (income tax under €19,950)
- Church Tax: 8-9% of income tax if you’re a church member (can opt out via Kirchenaustritt)
- Trade Tax: 7-17% for self-employed (€24,500 exemption for individuals)
Filing Requirements
Deadlines: July 31 (self-filed) or February 28 of the following year (with tax advisor). Required if self-employed, multiple income sources, or claiming deductions.
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Dual Tax Compliance Strategy
FEIE vs. Foreign Tax Credit Decision
Foreign Earned Income Exclusion (FEIE): According to the IRS, for 2025, the exclusion amount is $130,000 from US taxation. You can learn more about qualifying for the FEIE and the requirements you need to meet.
When FEIE Works Best:
- The German tax rate is lower than the US rates
- Earn under $130,000
- Want to minimize US taxable income
When Foreign Tax Credit Works Better:
- Pay higher German taxes than equivalent US taxes
- Earn above the FEIE limit
- Have passive income
Many Americans in Germany benefit more from the Foreign Tax Credit due to higher German rates.
FBAR and FATCA Requirements
- FBAR: Required if foreign accounts total $10,000+ (due October 15)
- FATCA: Required for foreign assets above thresholds based on filing status
Strategic Filing Tip
File German taxes first, then the US return. This ensures accurate foreign tax credit calculations and optimizes overall tax burden.
Common Expat Scenarios
- Corporate Employees: Assignment packages affect tax calculations. Housing allowances may qualify for foreign housing exclusions.
- Self-Employed: Face German trade tax (7-17%), VAT (19%), and complex US self-employment considerations. Totalization agreement can reduce duplicate Social Security taxes.
- Retirees: Under a treaty, German state pensions may be exempt from US taxation. However, US Social Security remains taxable in both countries.
- Digital Nomads can stay 90 days visa-free. Longer stays require residence permits, which affect their tax status in both countries.
Banking and Financial Considerations
Opening German Bank Accounts
Major banks (Deutsche Bank, Commerzbank, DKB) work with US citizens. Expect a 1-2 week process requiring a passport, a residence permit, address proof, and an employment contract.
Investment Restrictions
- PFICs: Most German mutual funds trigger punitive US tax treatment
- Currency Tracking: Document exchange rates for US reporting
- Reporting: All German accounts count toward FBAR/FATCA thresholds
Practical Living Information
Visa Requirements
Americans can enter visa-free for 90 days. Longer stays require residence permits. Common types include work visas, freelancer visas, student visas, and family reunion visas.
Healthcare System
Mandatory insurance (public or private). Contribution rate: 14.6% of gross salary plus supplementary rate (average 2.5%) plus long-term care (2.6-4.2%). Shared 50/50 with the employer.
Cost of Living
Monthly expenses: €620-€1,360 for a single person. Housing: €430-€1,218 outside city centers. Deutschland Ticket: €58/month for unlimited public transport.
Common Mistakes to Avoid
- Timing Errors: Filing US taxes before receiving German documents.
- Solution: File German taxes first.
- Documentation Issues: Poor record-keeping of foreign tax payments.
- Solution: Track exact EUR amounts and exchange rates.
- Strategic Errors: Wrong FEIE vs. Foreign Tax Credit choice.
- Solution: Calculate both scenarios annually.
- Missing Deadlines: Forgetting FBAR/FATCA while focusing on income taxes.
- Solution: Create a compliance calendar.
Your Action Plan
New Arrivals (First 90 Days)
- Register address (Anmeldung)
- Open a German bank account
- Enroll in health insurance
- Apply for a residence permit
- Start tracking days in Germany
Annual Compliance Timeline
- January-March: Gather tax documents from both countries
- April-July: File German taxes, then US return with extension
- August-October: File final US return with German figures, submit FBAR
FAQs About Expat Taxes in Germany
Do I need to file both U.S. and German tax returns?
Yes, if you meet the income threshold for either country. The U.S. requires citizens to file if they earn over $13,850 (single) or $27,700 (married filing jointly), while Germany requires tax residents to file if they have multiple income sources or want to claim deductions. Even if you don’t owe taxes to one country, you’re still required to file returns in both.
Can I use a tax calculator to estimate my taxes in Germany?
Yes, several online calculators can help estimate your German tax liability. You’ll need your gross income, tax class, church tax status, and any deductible expenses like work-related costs or insurance premiums. The German Federal Ministry of Finance provides an official calculator, though most are in German.
What happens if I don’t file my U.S. return?
You could face penalties for late filing, plus interest on any taxes owed. However, the IRS offers amnesty programs like Streamlined Filing Compliance Procedures for non-willful non-filers. These programs allow you to catch up on past returns without penalties if you meet specific criteria.
Can I exclude all my German income from U.S. taxes?
Not necessarily. The Foreign Earned Income Exclusion allows you to exclude up to $130,000 of earned income for 2025, but this doesn’t apply to passive income like dividends, interest, or rental income. If you earn more than the exclusion limit or have significant investment income, you may still owe U.S. taxes even after using the FEIE.
Do I have to pay German taxes on my U.S. income?
If you’re a German tax resident, you must report worldwide income to Germany, including U.S.-sourced income like Social Security or retirement distributions. However, the U.S.-Germany tax treaty may provide relief for certain types of income. You can typically claim foreign tax credits in Germany for U.S. taxes paid on the same income.
How long can I stay in the U.S. without affecting my German tax status?
Generally, you can visit the U.S. for up to 183 days in a calendar year without losing German tax residency. However, if you maintain significant ties to the U.S. (like a permanent home), you could be considered a U.S. tax resident again. For the Physical Presence Test for the FEIE, you can only be in the U.S. for 35 days out of any 365-day period.
Do I need to report my German bank accounts to the U.S.?
Yes, if your German accounts exceed $10,000 in aggregate at any time during the year, you must file an FBAR. You may also need to file Form 8938 (FATCA) if your assets exceed higher thresholds. Failure to file these forms can result in significant penalties, even if you don’t owe any taxes.
Tax Compliance for US Expats in Germany
Navigating US-Germany dual taxation doesn’t have to feel overwhelming. Greenback is an American company founded in 2009 by US expats for expats. We’ve helped over 23,000 expats file over 71,000 returns while maintaining a 4.9-star average across 1,200+ TrustPilot reviews.
Contact us, and one of our customer champions will gladly help. If you need very specific advice on your specific tax situation, you can also click below to get a consultation with one of our expat tax experts.
This guide provides general information. Tax laws change frequently, and situations vary. Always consult qualified tax professionals for personalized guidance.
