Purpose – The purpose of this paper is to observe sexual orientation-based differences in German incomes. Gay men and lesbian women sort themselves into different occupations and sectors than their heterosexual counterparts.

Design/methodology/approach – Analysis of German Mikrozensus data for 2009. Mincer-style OLS income regerssions.

Findings – The author finds evidence that cohabiting gay men have an income penalty of 5-6 per cent compared with married men, while lesbian women have a premium of about 9-10 per cent compared with married women. Lesbians in a registered same-sex union have an income gain of about 12-16 per cent, while the effect for men is not statistically significant.

Originality/value – This is the first paper using German data to analyse income differentials based on sexual orientation (gays and lesbians).