FamEntlastG

Increase in basic tax-free allowance and child benefit among other things

On 25.3.2015, the German cabinet decided to increase the basic tax-free allowance, tax-free child allowance and child benefit retrospectively from 1.1.2015 and child supplement from 1.7.2016.

Background: The draft law to increase the basic tax-free allowance, the tax-free child allowance and child benefit and the child supplement aims to guarantee the constitutionally required increase of the basic tax-free allowance and the tax-free child allowance for the years 2015 and 2016 in accordance with the guidelines of the 10th subsistence level report. The basic tax-free allowance is to be raised by 118 euros in 2015 and by a further 180 euros in 2016. The tax-free child allowance is to be increased by 144 euros in 2015 and by a further 96 euros in 2016. The basis for this is the 10th subsistence level report of the Federal Government dated 30.1.2015. The child benefit for 2015 and 2016 is to be increased at the same time. A monthly increase in child benefit of 4 euros per child is planned from 1.1.2015 and a further increase of 2 euros per child is planned from 01.01.2016.

The Federal Government also decided to raise the child supplement by 20 euros to 160 euros a month from 1.7.2016. The child supplement benefits parents whose earned income is basically sufficient to cover their own needs but who do not have sufficient financial means to cover the needs of their children.

The draft law provides for the following adjustments:

Basic tax-free allowance (currently 8,354 euros):

  • Increase from 1 January 2015 by 118 euros to 8,472 euros
  • Increase from 1 January 2016 by a further 180 euros to 8,652 euros

Tax-free child allowance (currently 7,008 euros including tax allowance for care and upbringing or education):

  • Increase from 1 January 2015 by 144 euros to 7,152 euros
  • Increase from 1 January 2016 by a further 96 euros to 7,248 euros

Child benefit (currently 184 euros for the first and second child, 190 euros for the third child and 215 euros for the fourth child and any further children):

  • Increase from 1 January 2015 by 4 euros a month per child
  • Increase from 1 January 2016 by a further 2 euros a month per child

Child supplement (currently max. 140 euros a month):

  • Increase from 1 July 2016 by 20 euros a month

Time schedule: According to current information, the legislative procedure should be complete by the middle of October.