The tax rate (percentage of the income) increases with the income, this is called tax progression. Tax payers with an income of more than EUR 52.000 have to pay 42%. If they earn more than EUR 250.000 they have to pay 45%. However, if you earn more than EUR 52.000 only the incremental amount over this threshold is taxed at 42%. The first EUR 52.000 are taxed the same way, as if you would only earn EUR 52.000.
The progression is very smooth in steps of EUR 36., as opposed to brackets as is the case in the Netherlands.
Some tax free income (e. g. foreign income or social security payments) has to be regarded for the progression. Example: If you earn EUR 10.000 in Germany and you have no tax free income you do not have to pay taxes. But if you earn EUR 10.000 in Germany and you have tax free foreign income of at least EUR 52.000 you will have to pay German income taxes of EUR 4.200.
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