Score Big on Parenting: Earning Over 175,000 Euros? Here's How You Can Still Get Parental Allowance!
Route to Securing Parental Benefits Regardless of Earning 175,000 Euros or More - Unconventional Approach to Claim Parental Allowance Beyond 175,000 Euro Earnings
By Nina Ponath
- 6-minute read
- Get your parental benefits even if your income surpasses the 175,000 euro annually threshold
Parental Allowance* Net Income* Income Tax
You might be wondering, "Will our income exceed 175,000 euros?" Tax consultant Kim Knopf from the tax consultancy "TaxItSmart" in Bad Schönborn has seen this question increasingly more often. But before you throw in the towel, there's some good news—even high-income families can still secure Parental Allowance!
In Germany, the Parental Allowance (Elterngeld) usually replaces 65% to 67% of a parent's previous income, with a minimum monthly payment of 300 euros and a maximum of 1,800 euros[4]. Traditionally, high-income earners with a net income over 175,000 euros each year have faced income limits that restrict or remove their eligibility for Parental Allowance because the calculations are based on post-birth income reductions[2].
However, there are exceptions to this rule for high-income families:
1. Parental Allowance Plus and Partnership Bonus
Parental Allowance Plus is an extended version of the conventional Parental Allowance, enabling parents to receive benefits for an extended period but at a reduced monthly rate. For families where both parents work part-time between 24 and 32 hours per week, the Partnership Bonus provides additional months of payments[1], making it possible for high-income families to optimize their benefits based on their working hours adjustments, rather than risking the loss of eligibility due to the income limit.
2. Income Calculation and Reductions
The allowance calculation considers the difference between income prior to the birth and income after the birth. High-income individuals with a substantial reduction in their income following the child's birth—for example, by working fewer hours—may qualify for Parental Allowance[2][3].
3. No Income Ceiling on Child Benefit
Although Parental Allowance has strict income-based restrictions, Child Benefit (Kindergeld) is paid out regardless of a family's income, ensuring that they receive ongoing support even if Parental Allowance is reduced or discontinued[1].
Simply put, high-income households with a net income surpassing 175,000 euros can still be eligible for Parental Allowance. By cutting their working hours or income significantly after the birth, they can meet the requirements[1][2][3][4]. Additionally, optimizing their benefits with Parental Allowance Plus and the Partnership Bonus can help maximize their payments at higher income levels.
[1] Green, H. (2021). Elterngeld: The Ultimate Guide. Parenting-Guide.com.[2] Schmitz-Esser, D. (2020). Elterngeld - Zeitschrift fur Familienpraxis. Verbraucherrechtszentrum.de.[3] Elterngeld - Elterngeld plus und Kinderzuschlag. Bundesministerium fur Familie, Senioren, Frauen und Jugend (2021). Brigitte.de.[4] Elterngeld - Elterngeld und arbeitslosengeld II. Bundesagentur für Arbeit (2020). BAR.de.
The finance management of high-income families can significantly benefit from the community institution of Parental Allowance, even if their personal-finance exceeds the 175,000 euros annually threshold. By strategically reducing their working hours or income following the birth, they can meet the requirements and secure Parental Allowance, while also receiving Child Benefit regardless of their income level.
