Parental Allowance Adjustments on the Horizon
Germany's parental allowance scheme is bracing for changes, with income limits being phased out for high-earning families starting next year. Initial plans have been amended, revealing a more gradual income limitation reduction.
Rather than a sudden shift, the income limits will decrease progressively. Until March 2023, they will remain at €300,000 for taxable annual income. By the year's end, the limit will have fallen to €200,000. From April 2025, only families with less than €175,000 of taxable income annually will continue to qualify for parental allowance.
Initiated by Family Minister Lisa Paus (Greens), high-income families will no longer receive parental allowance if their combined annual taxable income surpasses €150,000. Presently, the limit is €250,000 for individual parents and €300,000 for couples.
Reversing past cuts and fostering stronger family cooperation, SPD member Felix Döring explained that families require ample time adapting to these alterations. The new regulations will afford more flexibility, enabling families to truly embrace parental leave entries.
Couples can still share up to 14 months of parental leave, though only for a maximum of one month at a time. At least one partner must take leave independently and within the child's first year of life. This stipulation does not apply to multiple births.
These income limit adjustments significantly impact households with high earnings, as families earning more than €175,000 annually from April 2025 will no longer qualify for parental allowance. Parental leave is still an option for families by allowing up to 14 months of shared leave per child, albeit with a one-month-at-a-time signal and mandatory individual leave for at least one partner within the child's first year.
Enrichment Data:
- Elterngeld: From 1 April, 2024, single parents with taxable incomes exceeding €200,000 and individual parents earning more than €150,000 will no longer be eligible for Elterngeld. For births from 1 April, 2025, couples with taxable incomes surpassing €175,000 will no longer receive Elterngeld. The threshold for single parents remains at €150,000.
The parental allowance scheme calculates payments as up to 65% of pre-birth net salary, with a minimum of €300 monthly payment and a maximum of €1,800 monthly payout.[4]
