In 2021, the monthly child allowance will increase by 15 euros. This decision was made by the Cabinet of Ministers within the framework of the Family Support Law. According to the bill, in addition to increasing payments for families, the tax burden will be eased. The tax-free amount per child will be increased by more than € 500 to € 8,388. Finance Minister Olaf Scholz said that in this way German families will be exempt from taxes in the amount of about twelve billion euros a year. Low- and middle-income families will benefit the most from the innovation.
From 1 January 2021, the allowance for the first and second child will increase to 219 euros per month. For the third child in the family, they will pay 225 euros, for the fourth and further children 250 euros.
In addition, the government plans to facilitate the payment of taxes for all residents of the country. The amount up to which taxes are not levied will be increased in 2021 from € 9,408 to € 9,696. 42% will be deducted from an annual income of 57,919 euros (previously 57,052) euros.
Relatives will also receive incentives to take care of a person in need of home care. It is planned that they will have a preferential tax rate for them. The possibility of increasing fixed care benefits is also being considered. A prerequisite is that the caregiver does not receive any other income for the work performed and helps the sick or infirm in his home.
In particular, the bill provides for the payment of benefits regardless of the level of “helplessness”. The payment for caring for people with a 4 or 5 level of need for care “will be increased from 924 euros to 1,800 euros. A flat rate is introduced for caring for people with a second degree – 600 euros and 1,100 euros for caring for people with a third degree.
According to the Ministry of Health, for those caring for people with degrees 2 and 3, the average tax relief will be 180 (2), 330 (3) euros per year.
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