Families with children should be financially better off next year. The child benefit is to increase by 15 euros per child at the turn of the year, and the tax-free child allowance is increased by around 570 euros: this is provided for in the Family Relief Act, which was passed by the Federal Cabinet. The limit of the tax-exempt subsistence minimum will also be raised.

According to calculations by the Federal Ministry of Finance, the measures should lead to families in Germany having 12 billion euros more to spend each year. Federal Finance Minister Olaf Scholz (SPD) described the decisions as “good news for all families and children in Germany”.

The increase should apply from January 1, 2021. Then families get

  • for the first and second child respectively 219 Euro,

  • for the third child 225 Euro,

  • for the fourth child and all other children 250 Euro.

The tax-free child allowances will be increased by a little more than 500 euros from 7812 euros to 8388 euros. The allowances are intended, among other things, to ensure that childcare, education and training needs are not taxed.

In the coalition agreement of 2018, an increase in child benefit by a total of 25 euros per child was agreed. After the increase of 10 euros in July 2019, it is now the second stage of the project.

The proposal now approved in the cabinet also provides for an increase in the tax-free subsistence level in two steps: in 2021, the basic allowance will increase from 9408 euros to 9696 euros. A year later, it increases further to 9984 euros.

Icon: The mirror