German Parental Income Limit to Fall Only Gradually

The German parental income limit is a hot topic in Germany right now. Parental allowance makes up for a lack of income when parents want to be there for their child after the birth and therefore interrupt or reduce their work. The parents are jointly entitled to a total of 14 months of basic parental allowance if both parents are involved in childcare and the parents lose income as a result. They are free to divide the months between them. One parent can claim a minimum of two and a maximum of twelve months for themselves.

Allowance Types

There are other models, such as Parental Allowance Plus, which can be claimed for twice as long as Basic Parental Allowance: one month of Basic Parental Allowance is equivalent to two months of Parental Allowance Plus. The amount of parental allowance depends on how much income the parent caring for the child had before the birth and whether income is lost after the birth. Parents with higher incomes receive 65 %, and parents with lower incomes up to 100 % of their previous income. Depending on income, the basic parental allowance is between €300 and €1,800 per month and the Parental Allowance Plus is between €150 and €900 per month. The minimum parental allowance is paid to all those who look after their child themselves after the birth and work a maximum of 32 hours a week.

What’s changing

According to the Federal Parental Allowance and Parental Leave Act (BEEG), parents with a taxable income of less than €300,000 in the year before the birth receive parental allowance. For single parents, it must be less than €250,000. In the search for potential savings for the federal budget, these caps are to be lowered. According to current plans, the income limit is to be gradually lowered. It is to remain at the current level of €300,000 in taxable income until the end of March 2024. From April 1, 2024, couples with an annual taxable income of over €200,000 will no longer receive parental allowance. One year later, from April 1, 2025, the limit is to fall again to €175,000. For single parents, the previous limit of €250,000 will continue to apply.

 

Profion provided this information about the German parental income limit. If you need employee benefits consulting in Germany, please contact Asinta, and we will put you in touch with the local experts at Profion.