--- title: "US tax for Americans in Germany | Expat Tax Abroad" url: https://expattaxabroad.com/insights/us-tax-americans-in-germany/ description: "German rates are high enough that the foreign tax credit almost always beats the exclusion — and church tax belongs on Form 1116 rather than being left off it." lang: en --- Skip to content IRS Enrolled Agent · One preparer, every return 48 country guides 48 guides (https://expattaxabroad.com/countries/) Verify at IRS.gov: https://irs.treasury.gov/rpo/rpo.jsf Facebook: https://www.facebook.com/people/Jorge-I-Rivas-ExpatTax/61572578032002/ Instagram: https://www.instagram.com/jrivas0013/ LinkedIn: https://www.linkedin.com/in/jorgeirivas1186sm X: https://x.com/jrivas0013 Filing rules · 22 September 2026 # US tax for Americans in Germany There is a US–Germany income tax treaty and a totalization agreement. Income tax reaches 45%, with a solidarity surcharge and, for anyone registered with a church, church tax on top. That effective rate usually makes the foreign tax credit the better route — and it keeps the income counted as compensation for retirement-account purposes, which the exclusion does not. Image: A treaty and a totalization agreement both in place, with the credit marked as the route German rates almost always favour. (https://expattaxabroad.com/features/art-germany-1600.webp) Image: Jorge I. Rivas, EA (https://expattaxabroad.com/_astro/jorge-rivas-avatar.BkTc9hQv_ZqNxAY.webp) Jorge I. Rivas, EA Enrolled Agent · 7 minutes to read ## The credit almost always wins here German income tax reaches 45%, and with the solidarity surcharge and church tax the effective rate on a professional salary sits comfortably above the US rate on the same income. Form 1116 therefore tends to remove the US liability entirely and leave excess credits carrying forward for up to ten years. There is a second reason to prefer it, and it is the one people discover too late: income excluded under §911 is not compensation for IRA purposes. A year run wholly through the exclusion can leave you unable to contribute to a retirement account at all, while the credit route keeps that open. ## Church tax is creditable, and routinely left off Church tax is assessed as a percentage of your income tax, which generally makes it an income tax rather than a charitable contribution — and therefore creditable on Form 1116. It is left off constantly by people who think of it as a donation to their parish. The solidarity surcharge is the same shape: a surcharge computed on income tax, creditable on the same basis. It was scaled back for most taxpayers from 2021 and still applies at higher incomes, so whether there is any to claim depends on the year and the income. ## German pension products are not automatically US-deferred Riester, Rürup and company arrangements defer German tax. None of them automatically defers US tax. Each has to be characterised before anything can be said about the contributions, the growth inside, or the reporting that follows — and getting that wrong creates annual filings nobody knew they had. The treaty does contain pension provisions, and they can help. They are a position to take with the scheme documents in front of you rather than an assumption to carry from a colleague. ## The totalization agreement, and the certificate The agreement generally assigns your social security coverage to one country. Where German coverage applies, the 15.3% US self-employment charge falls away — on a certificate of coverage, which is evidence rather than an assertion. For a freelancer registered in Germany that single document is often worth more than every deduction on the return. ## A worked example, tax year 2025 A single American employed in Munich on salary equivalent to $160,000, with German income tax, solidarity surcharge and church tax totalling $60,000 for the year. | Salary | $160,000 | | --- | --- | | German income tax, solidarity surcharge and church tax | $60,000 | | US taxable income after the standard deduction | $144,250 | | US income tax before the credit | $27,467 | | Foreign tax credit allowed | $27,467 | | US income tax after the credit | $0 | | Excess credit carried forward | $32,533 | German taxes of $60,000 exceed the $27,467 of US tax on the same income, so the credit removes the US liability and $32,533 carries forward. Leaving church tax off Form 1116 — a common omission — would reduce the credit claimed without changing the German tax actually paid. Sources: IRC §901 and §904; IRS Form 1116 instructions; Rev. Proc. 2025-32. Scroll the table sideways | Fact | Position | | --- | --- | | US income tax treaty | Yes | | Totalization agreement | Yes | | Local income tax | Progressive to 45%, plus solidarity surcharge and church tax | | Self-employment tax (SECA) | Relieved where the agreement covers you | | FBAR threshold | $10,000 aggregate, any point in the year | Sources IRC §219, §901, §904 and §911; US–Germany income tax treaty and protocol; US–Germany totalization agreement; IRS Publication 54; IRS Publication 514; IRS Form 1116 instructions; German church tax and solidarity surcharge rules; Rev. Proc. 2025-32; 31 CFR 1010.350. US figures are tax year 2025. Checked 22 September 2026. Change log 22 September 2026 First published Germany — full country guide →: https://expattaxabroad.com/countries/germany/ Expat tax returns →: https://expattaxabroad.com/services/expat-tax-returns/ FBAR / FATCA compliance →: https://expattaxabroad.com/services/fbar-fatca-compliance/ Treaty & totalization matrix →: https://expattaxabroad.com/tools/treaty-totalization-matrix/ Streamlined catch-up filing →: https://expattaxabroad.com/services/streamlined-catch-up-filing/ Home →: https://expattaxabroad.com/ All insights →: https://expattaxabroad.com/insights/ ## Questions Americans in Germany ask ### Is German church tax creditable on my US return? Generally yes. It is assessed as a percentage of your income tax, which makes it an income tax rather than a charitable gift, so it belongs on Form 1116. ### Does my German pension grow tax-free for US purposes? Not automatically. German deferral is not US deferral. The answer depends on how the arrangement is characterised, and getting that wrong can create annual reporting you did not know you had. ### Should I use the credit or the exclusion in Germany? Almost always the credit. German effective rates sit above US rates, so Form 1116 removes the liability and leaves credits to carry forward — and unlike the exclusion it keeps your income counted as compensation for IRA purposes. ### Is the solidarity surcharge creditable too? On the same basis as church tax: it is computed on income tax, so it is creditable as an income tax. It was scaled back for most taxpayers from 2021 and still applies at higher incomes, so whether there is any depends on your year and income. ### I have not filed for several years while in Germany. What now? If the failure was non-willful — which describes most people in this position — the Streamlined Foreign Offshore Procedures waive the failure-to-file, failure-to-pay and FBAR penalties: three years of returns, six years of FBARs, and Form 14653. ## Filing from Germany? Fifteen minutes settles whether every creditable German tax is actually on your Form 1116, and what your pension arrangement is doing. Book a 15-minute call: https://expattaxabroad.com/book/ Complete return $599 Prepared and signed by an Enrolled Agent Book a call (https://expattaxabroad.com/book/) ## Structured data ```json { "@context": "https://schema.org", "@graph": [ { "@type": "Person", "@id": "https://expattaxabroad.com/#jorge", "name": "Jorge I. Rivas", "honorificSuffix": "EA", "jobTitle": "Enrolled Agent", "description": "IRS Enrolled Agent specialising exclusively in US tax for Americans living abroad. 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