Score Big With Parental Allowance, Even Earning Above 175k Euros! Here's How!
- by Nina Ponath
- ~ 6 Min Read
Strategies for obtaining parental benefits despite earning above €175,000 annual income - Strategies for Qualifying for Parental Allowance Despite Earning Over 175,000 Euros Yearly
Tax consultant Kim Knopf from "TaxItSmart" in Bad Schönenborn has received an influx of questions, one of them being, "Will our income reach 175,000 euros?" So, what if you indeed find yourself in this high-income bracket? Well, you've still got a shot at qualifying for Parental Allowance!
- Parental Allowance
- Net Income
- Income Tax
Parental Allowance Breakdown
Parental Allowance substitutes 65% to 67% of pre-baby income for those taking a break from work to care for their little one. The allowance is paid for up to 12 months, but it can extend to 14 months if both parents share their leave. The maximum monthly payment is capped at 1,800 euros.[2][3]
Income Limits Explained
- Parental Allowance is calculated based on a parent's income prior to the birth and the income lost afterward.[4]
- Although the monthly benefit is capped, there's no absolute upper income limit that prevents eligibility.
- High-income parents will have their benefits capped at the maximum amount (1,800 euros monthly), meaning they receive a smaller percentage of their lost income but can still qualify.[4]
How High-Income Parents Can Still Qualify
- With a net annual income surpassing 175,000 euros, parents can apply for Parental Allowance, though the allowance will be capped at the maximum monthly payment.[4]
- To qualify, they must have had taxable employment income before the birth and should reduce or stop work to take a break for childcare.[4]
- Working part-time between 24 and 32 hours per week could also entitle parents to the Partnership Bonus, granting extra months of Parental Allowance Plus payments.[1]
Conclusion
Even with a net income above the 175,000 euros mark, German parents can still receive Parental Allowance, albeit capped at the statutory maximum amount of 1,800 euros per month. The allowance provides a portion of income lost due to childcare leave, thus high earners receive a fixed maximum instead of a proportional replacement of high income. The Partnership Bonus scheme could benefit dual-working parents by extending benefits.[1][2][3][4]
- High-income parents, even with net incomes exceeding 175,000 euros, can still qualify for Parental Allowance, though the allowance will be capped at the maximum monthly payment of 1,800 euros.
- Managing personal-finance effectively, high-income parents could seek financial advice from community institution tooptimize their social security benefits and ensure a stable income flow during their child's early years.
