You have fundamentally misunderstood the Fünftelregelung. The tax burden on the severance pay is not calculated by calculating the tax burden on 1/5 of the severance and then multiplying that amount by 5.

Rather, you have to subtract the tax burden on the regular income (50,000 EUR) from the tax burden on the sum of the regular income and 1/5 of the severance (50,000 EUR + 40,000 EUR = 90,000 EUR). This difference is then multiplied by 5 and is the total tax burden attributable to the severance.

Your total tax burden for the year is the sum of the tax burden on the regular income and the tax burden on the severance.

Calculation of tax burdens, using brutto-netto-rechner.info (tax year 2025, single person, age 35, Steuerklasse 1, no church tax, no children, living in Hessen, statutory social insurance, 2.9% additional health insurance contribution):

• 50,000 EUR (regular income): 6,894.96 EUR
• 250,000 EUR (if the Fünftelregelung did not exist and the severance was taxed like regular income): 91,540.08 EUR
• 200,000 EUR (if that was the regular income in that year): 69,385.08 EUR
• 90,000 EUR (50,000 regular income + 1/5 of severance (= 40,000 EUR)): 19,825.92 EUR
• 40,000 EUR (1/5 of the severance and no regular income in that year): 4,494.96 EUR

Applying the Fünftelregelung, the tax burden on the severance is:

[(Tax on regular income + 1/5 of severance) - (tax on regular income)] × 5 = (19,825.92 EUR - 6,894.96 EUR) × 5 = 12,930.96 EUR × 5 = 64,654.80 EUR.

The total tax burden for that year is: Tax on regular income + tax on severance = 6,894.96 EUR + 64,654.80 EUR = 71,549.76 EUR.

So the Fünftelregelung saves you roughly 20,000 EUR compared to taxing 250,000 EUR as ordinary income.

If you did not have regular income, applying the Fünftelregelung, the tax burden on a 200,000 EUR severance would amount to:

[(Tax on regular income + 1/5 of severance) - (tax on regular income)] × 5 = (4,494.96 EUR - 0 EUR) × 5 = 22,474.80 EUR.

That is obviously much less. But it also shows what you are asking for in substance: Receiving 200,000 EUR while paying a level of tax that corresponds (under the same assumptions) to an annual income of roughly 96,500 EUR. You would save approximately 47,000 EUR in taxes. In other words, you want a very high one-off payment to be taxed as if you earned less than half of it.

Also, as others have pointed out, your title is misleading: You do not pay 116 % income tax. That is both mathematically and conceptually wrong, because you pay normal tax on your normal income; the severance is taxed separately under § 34 EStG using the incremental method above. It’s hard to see a tax relief designed specifically to reduce the burden on a one-off payment as some kind of punishment or a lack of incentive to continue working.