Before you start

Steuer-ID, issued automatically after your Anmeldung
An understanding of which tax class applies to you
Records of foreign income, foreign accounts, relocation costs and commuting distance
An ELSTER account, if filing yourself

Step-by-step

1
Hand payroll your Steuer-ID as soon as it arrives
Until the employer has it, wage tax is withheld under the least favourable class and a large amount comes off your pay. It is reconciled later, but the cash-flow effect during a move is real. Chase the number rather than waiting for it.
Via employerWho: YouAs soon as issued
2
Check your tax class rather than accepting whatever was applied
Class 1 for single people, class 2 for single parents, and married couples choose between 4/4, 3/5 and the Faktorverfahren. A couple with unequal incomes improves monthly cash flow with 3/5, but the annual liability is identical either way. Changing class is a short form.
OnlineWho: You
3
Verify the church tax line on your first payslip
Declaring a recognised religion at registration triggers Kirchensteuer at 8% of your income tax in Baden-Württemberg. Read the payslip rather than assuming. Leaving the church is a formal act at the registry with a fee, effective from the following month only.
In personWho: You
4
Expect the spring profit share to be withheld harshly
The large regional employers pay an annual result-based bonus, typically in spring. Payroll treats a one-off payment as a sonstiger Bezug and withholds as if that month's income continued all year, which can look punitive on the payslip. It is corrected when you file, not before.
Via employerWho: Employer
5
Claim the commuting allowance and the relocation costs
The Entfernungspauschale is claimed per kilometre of one-way distance for every working day, and in a region where people live in Stuttgart and work in Sindelfingen, Böblingen or Ditzingen it adds up quickly. Add removal costs, flat-viewing trips, double rent during the transition, German lessons and work equipment.
OnlineWho: YouBy 31 July of the following year for mandatory filers
6
Declare foreign income and foreign accounts
German residents are taxed on worldwide income subject to treaty relief, and Germany participates in automatic exchange of financial account information. Handle it in year one rather than being asked about it in year three.
OnlineWho: You

Documents you’ll need

Steuer-ID
Lohnsteuerbescheinigung — the annual employer certificate
Receipts for relocation costs, work equipment and training
A record of commuting days and one-way distance
Records of foreign income and foreign accounts

Things most newcomers don’t know

Baden-Württemberg charges church tax at 8%, and Bavaria is the only other state that does.

Every other German state levies 9% of your income tax liability. The election was made on your registration form and is deducted automatically from payroll with no separate notification, so most newcomers never link the payslip line to the appointment. If you did declare a religion and did not mean to, leaving is a formal registry act with a fee that takes effect only from the following month — so acting in January costs far less than acting in November.

Source: Oberfinanzdirektion Baden-Württemberg

The spring profit share is withheld as if you earned it every month, and the payslip looks alarming.

Mercedes, Porsche, Bosch and the larger suppliers pay a substantial result-based bonus, usually in spring. German payroll treats a one-off payment as a sonstiger Bezug and computes withholding by annualising it, which can take a startling share of the gross. Nothing is wrong: the overpayment is recovered when you file. But if you do not file that year, you simply keep the over-withholding donated to the Finanzamt.

Source: Bundeszentralamt für Steuern

The commuting allowance is worth more in this region than in almost any other German city.

The Stuttgart region is a set of employer towns — Sindelfingen, Böblingen, Ditzingen, Gerlingen, Waiblingen — rather than one central business district, so a very large share of the workforce commutes across municipal boundaries daily. The Entfernungspauschale is claimed per kilometre of one-way distance for every working day, and over a year it is one of the largest single deductions an ordinary employee here has.

Source: Bundesministerium der Finanzen

Compare a German offer on net, not gross — the social contributions are heavy.

Pension, health, unemployment and long-term care insurance come off gross pay in addition to income tax, split with the employer. A German gross figure converts to net far less favourably than the equivalent in the UK, the Gulf or much of eastern Europe. In a region where the headline engineering salaries are high, the gap between the offer letter and the bank transfer surprises people. Run the federal gross-to-net calculator before you negotiate.

Source: Deutsche Rentenversicherung

Common mistakes to avoid

Declaring church membership at registration without realising it costs 8% of your income tax every year.
Not filing in a year you received a large one-off bonus and leaving the over-withholding with the Finanzamt.
Skipping the commuting allowance in a region built around cross-town commutes.
Reading your Steuerklasse as a tax rate rather than a withholding setting.
Comparing a German gross salary against a foreign one without modelling social contributions.

Some of this may be out of date. Spotted something inaccurate? Help us keep it right for the next newcomer.