The annual sixth: when special payments get the low rate
The line at which holiday and Christmas pay drop from the special rate into the normal scale, and why it moves during the year.
The annual sixth (Jahressechstel) is the ceiling up to which holiday pay, Christmas pay and bonuses are taxed at the fixed rates of section 67 of the Income Tax Act: the first €620 a year tax-free, then 6 % up to a total of €25,000. It equals one sixth of the regular pay received up to the month of payment, scaled up to a full year. With a constant salary that is exactly two monthly salaries, so both special payments fit. If your salary rises in summer, the sixth lags behind: with a rise from €3,000 to €3,300 from July, €27.27 of the November Christmas pay sit above the sixth and cost €6.78 of wage tax on the normal scale. The December control calculation gives most of that back. If your salary falls instead, for instance after moving to part-time, you may be taxed extra at year end. If the sixth does not exceed €2,615, special payments are entirely tax-free.
Does your Christmas pay still fit in the sixth?
Part above the sixth (November)
€27.27
| Sixth in November | €6,272.73 |
| Extra scale tax | €6.78 |
| Sixth at year end | €6,300.00 |
Checked by Radif Partners · Editorial policy · Calculation method
The rule in one sentence
Special payments are taxed at the fixed rates of section 67(1) of the Income Tax Act only to the extent that they do not exceed one sixth of regular pay. The law calls it the annual sixth; payroll checks it again at every payment, and once more at year end against every salary actually paid.
How the sixth is set at each payment
What counts is the regular pay already received up to the payment month, including that month’s salary. It is converted to a calendar year: the total divided by the number of months, times twelve. One sixth of that is the annual sixth. Whatever was already taxed at fixed rates in the same year is subtracted; the rest is the room left for the next payment.
| Payment | Sixth at that point | already used | room left |
|---|---|---|---|
| Holiday pay, June | €6,000.00 | €0 | €6,000.00 |
| Christmas pay, November | €6,272.73 | €3,000.00 | €3,272.73 |
In the example the holiday pay fits exactly, but only €3,272.73 of the Christmas pay do. The remaining €27.27 are added to the November salary and taxed at the marginal rate: €6.78 of wage tax instead of about €1.36 at the fixed rate.
The December control calculation
With the last regular salary of the year, the employer must form a control sixth: one sixth of all regular pay actually received in the year. Two outcomes are possible, both set out in section 77(4a), which section 67(2) refers to.
Too much at the low rate: extra tax
If more was taxed at fixed rates than the control sixth allows, the excess is re-taxed on the scale. This mainly hits people whose regular salary falls in the second half of the year, for example through part-time work, while Christmas pay still follows the old salary. In the example with €4,000 until June and €2,000 from July, €181.82 sit above the control sixth and the extra tax is €21.58.
No extra tax applies if, during the calendar year, any of these occurred: parental leave, sick pay, rehabilitation pay, care leave or care part-time, family hospice leave, reintegration part-time, military or civilian service, partial retirement benefit, partial pension, or the employment ended without a new one with the same employer or group in that year.
Too little at the low rate: refund
If less was taxed at fixed rates than the control sixth allows and part of a special payment had earlier gone above the sixth, that part is re-taxed at the fixed rates. This is exactly what happens after a summer pay rise: the control sixth covers all twelve salaries and is larger than November’s sixth. In the example €5.42 come back in December.
Does your Christmas pay still fit in the sixth?
Part above the sixth (November)
€27.27
| Sixth in November | €6,272.73 |
| Extra scale tax | €6.78 |
| Sixth at year end | €6,300.00 |
What raises the sixth and what does not
- Raises it: overtime pay including premiums, allowances, commissions and benefits in kind paid on a regular basis. Regular overtime means a larger sixth than your base salary suggests.
- Does not raise it: regular pay that is tax-free under section 3, with a few exceptions; nor special payments that end up taxed on the scale.
- Does not use it up: tax-free special payments, such as the employee bonus (Mitarbeiterprämie) of up to €500 in the second half of 2026 (section 124b).
Allowance and exemption limit
Two more figures work alongside the sixth. The €620 allowance applies once a year and is used up by the first special payment, usually holiday pay. The €2,615 exemption limit refers to the sixth itself: if the sixth is no higher, no wage tax falls on the special payments at all. That covers monthly salaries up to €1,308, mainly part-time and low full-time wages.
Planning pay around the sixth
When negotiating a raise, the timing matters: a raise from January changes nothing, one from autumn first creates an excess that usually returns in December. When changing jobs mid-year, look at the final settlement, because pro-rata special payments are often paid with the last salary. Run your own year through the holiday and Christmas pay calculator, where raise, start, exit, bonus and overtime can be entered month by month. The pay rise page shows what a raise brings overall.