As of: January 29, 2024, 2:33 p.m
By: Natascha Heidenreich
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Press
Split
The traffic light coalition is divided.
The accusation: Only rich families would benefit from the child tax allowance.
What it's all about.
Frankfurt – Federal Finance Minister Christian Lindner (FDP) wants to increase the tax allowance “for the children”.
After the federal government increased child benefit from 219 euros per child to 250 euros in January 2023, the child allowance is now also set to increase.
That sounds promising at first.
However, the enthusiasm of the other parties in the traffic light coalition is noticeably limited.
As reported in
Wirtschaftswoche
, SPD leader Lars Klingbeil even calls Lindner's proposal "unfair" and accuses the Federal Finance Minister that it would only benefit the children of rich parents.
But is child benefit or child allowance more worthwhile for parents?
Child benefit or child allowance: The decision is not up to the parents
The fact is, parents don't even have to decide whether they want child benefit or the child allowance.
During the tax return, the tax office automatically calculates which option is financially more suitable - i.e. whether one or the other is more worthwhile for the family.
An important tip: In any case, you should first apply for child benefit and be sure to fill out the child annex when filling out your tax return.
Child tax allowance: Do only rich families benefit?
© Joseffson/IMAGO
As of January 1, 2024, the child allowance was increased from 6,024 euros to 6,384.
According to the Finance Ministry's plans, this amount should increase retroactively to 6,612 euros.
The purpose of the allowance is to keep the minimum subsistence level for children tax-free.
However, the advantages are particularly evident for families with high incomes.
Instead of the child allowance, families with annual incomes of less than 60,000 euros receive child benefit.
The advantages of the tax cut are particularly noticeable to those who earn well
Families with a high annual income save hundreds of euros in taxes every year thanks to the tax allowance.
A calculation example from Wirtschaftswoche reveals exactly what this tax advantage could look like
:
According to this, a family with a taxable annual income of
120,000 euros
would have to pay around
29,360 euros in taxes
without the child allowance .
From these 120,000 euros, the Lindner required child allowance of 6,612 euros and around 2,928 euros (as an additional allowance for care, upbringing or training needs) can now be deducted.
Of the 120,000 euros annual contribution,
110,460 euros
remain that must be taxed.
Instead of 29,360 euros, this example family still has to pay around
25,670 euros in taxes
annually .
However, this tax advantage only begins at a certain salary bracket.
It is estimated that families only benefit from the tax allowance if their taxable income exceeds 80,000 euros.
(
nhf
)