Slashing Your Taxes: Making Over 175k Euros? Here's How to Still Score Parental Benefits!
- by Simon Westwood
- 6 Min
Strategies for Collecting Parental Allowance Even Beyond 175,000 Euros Income Limit - Strategies for claiming parental allowance despite annual income surpassing 175,000 euros
"Are we going to rake in more than 175,000 euros?" This question has been cropping up more frequently in the office of tax expert Kim Knopf, from the firm "TaxItSmart" in Bad Schönborn. Due to its tax-savvy nature, the firm has become a go-to for such queries.
- Parental Benefits
- Pre-baby Income
- Tax Refund
To offer some context, let's dive into parental benefits in Germany:
Parental Benefits: The Lowdown
Parental benefits, known as Elterngeld, are designed to partially compensate for the income loss suffered by parents who decide to take time off work to care for their newborn.
These benefits are accessible to parents who had salary before the child's arrival and subsequently experienced a reduction or complete loss of their income. Notably, parents with no pre-existing income can also qualify, albeit with a minimum allowance of €300 per month.
The benefit amount is contingent on the income before birth and the subsequent income loss, replacing between 65% and 67% of the previous net income, subject to minimum €300 and a max monthly payment capped at €1,800 as of 2025.[2][3][4]
Parental Benefits for High-Income Earners: Insider Traits
High-income earners can still receive Elterngeld, but the system operates differently compared to lower or middle-income parents:
Elterngeld: A Cap Complication
Elterngeld is capped at a monthly maximum of €1,800, irrespective of the income before the child's birth. Consequently, high earners' benefits are diminished proportionally, with a greater disproportion for those with exceptionally high incomes.
Income Threshold: Irrelevant Influence
Only income below a specific threshold is considered when calculating Elterngeld. Incomes above this threshold have no impact on the benefits received.
Parental Combination: Extended Perks
Both parents can claim Elterngeld, including Parental Allowance Plus and the Partnership Bonus if they share work hours between 24 and 32 hours per week. However, the maximum payment limits still apply.[1][4]
In summary, high-income earners in Germany can receive Elterngeld, but the benefit maxes out at €1,800 per month (independent of initial income), resulting in decreased financial support compared to their pre-baby income. The system is designed to balance budget considerations while incentivizing shared parental leave. To get a slice of the pie, high earners must file their application with the relevant authority and submit the necessary documentation.
In the context of high-income individuals seeking parental benefits in Germany, it's essential to understand that community institutions, such as the tax office, play a crucial role in aiding the application process due to the complexities involved with social security arrangements and personal-finance implications. Awareness of the Elterngeld systemspecifically the cap complication, income threshold, and parental combination extensionperms the high earners to claim parental benefits, albeit with a monthly maximum capped at €1,800, significantly less than their high pre-baby income.
