Parental Allowance 2025 – Everything Parents Need to Know

Parental Allowance 2025 – Everything Parents Need to Know

The Parental Allowance is a state support for parents of newborns and young children. It is designed to compensate for the loss of income when a parent works less or not at all after the birth to care for the child. It thus contributes to the financial security of families and promotes the compatibility of family and career. It is important to inform oneself early about the various options for parental allowance to optimize financial planning.

1. Duration and Amount of Parental Allowance

The parental allowance is offered in various forms, and the duration and amount of support depends on the individual situation of the parents.

• Basic Parental Allowance: Paid for up to 12 months, with the possibility of extending to 14 months if both parents share care. The amount of parental allowance ranges from 65% to 100% of the previous net income, with a minimum amount of €300 and a maximum amount of €1,800 per month.

• Parental AllowancePlus: This variant can be claimed for up to 24 months, but only at half the rate of the basic parental allowance. Parental AllowancePlus is particularly beneficial for parents who work part-time during parental leave and thus strive for a more flexible arrangement of their work and family time.

• Partnership Bonus: Parents who both work between 24 and 32 hours per week can receive up to four additional months of Parental AllowancePlus, which promotes shared responsibility for the care of the child.

• Minimum Amount: Parents who had no income before the birth are entitled to the minimum amount of €300 per month to ensure that these families also receive some financial support.

2. Changes from 2025

From 2025, there will be some significant innovations regarding parental allowance. The income threshold for receiving parental allowance will be reduced from €300,000 for jointly assessed couples and €250,000 for single earners to €175,000 per year. This means that high-income families will no longer be entitled to parental allowance. In addition, there will be more flexible part-time regulations. Parents who work between 24 and 32 hours per week can continue to receive parental allowance, and the partnership bonus will be made more flexible. There are also improvements for parents of premature babies; they can receive additional months of parental allowance, depending on when their child is born.

3. Tax Aspects of Parental Allowance

The parental allowance is tax-free, but is subject to progression reserve. This means that parental allowance increases the taxable income, which can lead to a higher personal tax rate. Parents should consider the possible tax implications of parental allowance when planning their finances, to avoid unexpectedly higher taxes on their other income.

4. Planning the Receipt of Parental Allowance

To optimally plan the receipt of parental allowance, parents should inform themselves early and consider the various options. They can use an online parental allowance calculator to calculate how much parental allowance they will receive. The application for parental allowance must be submitted to the competent parental allowance office, and it is advisable to prepare the application early, as certain documents such as the birth certificate and proof of income are required. Furthermore, parents should ensure that they sensibly combine the various parental allowance options to achieve the best financial results. Consulting professionals can also be beneficial here to optimally consider the individual situation.

5. Tips for Optimal Use of Parental Allowance

To make optimal use of the parental allowance, parents should inform themselves early, consider various options, and, if necessary, seek professional advice. It is also advisable to take advantage of the flexible part-time regulations and the partnership bonus to best reconcile work and family life.

Conclusion

The parental allowance will remain an important financial support for young families in 2025. However, with the new income thresholds, fewer parents will be entitled to it. Those who want to make optimal use of parental allowance should inform themselves early and skillfully combine the various options. Careful planning and awareness of the new regulations can be crucial in how well families can manage the financial challenges after the birth of a child. The parental allowance not only promotes the financial security of families but also encourages active parental involvement in the early stages of their child's life.