2025 brings more net income – and more for the child
Background: Income tax rate and child benefit have been adjusted
There was further movement in tax law at the turn of the year: at the end of 2024, the government decided to reduce the income tax rate and increase child benefit at the same time. The aim is to cushion inflation and further reduce the so-called cold progression.
What does this mean for you specifically? We have the most important changes at a glance.
New benchmarks in the income tax rate
The tax-free minimum subsistence level increases in several stages, i.e. the amount up to which no income tax is due. The progression zone (area with increasing tax rates) will also be adjusted:
| Year | Minimum subsistence level | Progression zone ends at | Maximum tax rate from |
| 2024 | 11.784 € | 66.760 € | 277.826 € |
| 2025 | 12.096 € | 68.480 € | 277.826 € |
| 2026 | 12.348 € | 69.878 € | 277.826 € |
Cold progression means that wage increases cause people to slide into higher tax brackets, even though there is no real increase in purchasing power. The adjustments are intended to prevent this.
Child benefit increases – in two steps
The monthly child benefit will be increased equally for all children:
- from 01.01.2025: from € 250 → € 255
- from 01.01.2026: from € 255 → € 259
Example: Anyone with three children will receive a total of €15 more per month from January 2025 – and then €27 more than before from 2026.
Child allowances will also be increased
In addition to child benefit, child allowances also play a role in income tax, especially for higher incomes. These are also increasing:
| Year | Child allowance (per parent) | BEA allowance | Total |
| 2024 | 3.306 € | 1.464 € | 4.770 € |
| 2025 | 3.336 € | 1.464 € | 4.800 € |
| 2026 | 3.414 € | 1.464 € | 4.878 € |
*BEA = care, education, training
Note: For married couples with joint assessment, the amounts count double.
When do the changes apply?
For wage tax deduction: Expected from March 2025, retroactively from January.
For self-employed persons & freelancers: As part of the income tax assessment for 2024 and 2025.
Child benefit: Increase takes effect automatically from January 2025.
Our tip:
More net income is possible – but only if the changes are implemented correctly.
Check your payslips (especially in March!) and apply for an adjustment to the advance payments if necessary.
Don’t forget: Even those who no longer receive a salary in December 2024 can benefit from the retroactive rate change – by filing a tax return.
If you have any questions about your payroll accounting, advance payments or child benefit arrangements, we will be happy to support you – clearly, comprehensibly and personally.
