Traffic light reduces planned cuts to parental allowance
The cuts to parental allowance are to be less significant than originally planned by the German government. From April 1, 2024, the upper income limit for entitlement to parental allowance for couples is to fall from 300,000 to 200,000 euros per year, then drop to 175,000 euros one year later, according to statements from the SPD parliamentary group after the Bundestag budget committee's adjustment meeting. For single parents, the limit is to be set at 150,000 euros from April 2024.
The draft from the FDP-led Federal Ministry of Finance, which the cabinet approved in August, initially envisaged a blanket reduction in the income limit to 150,000 euros. This limit was to apply to people with joint parental allowance as well as single parents. Previously, the income limit was 300,000 euros for couples and 250,000 euros for single parents.
The delayed reduction now agreed in committee is intended to give families more time to adjust to the changes, according to the SPD parliamentary group.
There had been controversial debates in the coalition about the cuts to parental allowance. The Ministry of Finance had called on Family Minister Lisa Paus (Greens) to make savings and proposed parental allowance as an alternative. Paus then decided to cap the income limit in order to avoid benefit cuts for households with lower incomes.
The traffic light coalition's decision to reduce the planned cuts to parental allowance has resulted in a less severe reduction of the upper income limit for couples. Starting from April 1, 2024, the upper income limit for entitlement to parental allowance for couples will be 200,000 euros per year, followed by a further reduction to 175,000 euros the year after, in contrast to the initial proposal of a blanket reduction to 150,000 euros by the FDP-led Federal Ministry of Finance. Despite these adjustments, the upper income limit for single parents will still rise from its current 150,000 euros to 150,000 euros starting April 2024.
Source: www.ntv.de
