Germany: Child benefit to increase from January

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In the coming 2021, the child benefit will increase by 15 euros. Thus, from January of the new year, parents will receive 219 euros per month for the first and second child instead of the 204 euros paid earlier. For the third child, the allowance will increase from 210 to 225 euros, and for the fourth and each subsequent child, it will be 250 instead of 235 euros per month.

At the same time, the tax-free income limit for children will increase, as will the amount of funds for the care, education or training of children. In total, they will increase by more than 500 euros, up to 8,388 euros. This part of income is not subject to taxes. Parents can either benefit from the payment of child benefits, or exempt from tax a portion of the income planned for children. Tax exemption is beneficial for residents of a high-income country. When filling out a tax return, the tax office calculates which option is more profitable for parents.

The base tax amount, that is, the part of income that is not taxed, increases for all residents of the country who receive income. In 2021, the tax-free income line will rise to 9,744 euros, and in 2022 – to 9,984 euros.

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