New regulations for parental allowance - changes for births April 2024

After controversial debates, new parental allowance regulations will now come into force on 1 April. The gradual reduction of the income limits in April 2024 and 2025 is intended to reduce the number of people entitled to parental allowance. The aim is to save around 250 million euros per year from 2026 onwards, in order to meet the tight savings targets set by the Federal Ministry of Finance.

Gradual reduction of income limits

For births up to 31 March 2024, an income limit of 300,000 euros for couples and 250,000 euros for single parents previously applied, above which parents were no longer entitled to parental allowance. For births from 1 April 2024, the income limit will now be reduced to 200,000 euros taxable income for couples and single parents alike. From 1 April 2025, the income limit will be further reduced to 175,000 euros. The taxable income is to be determined individually, taking into account tax deductions (such as special expenses, individual allowances, etc.), and is thus different from gross income.

Reduction of parallel receipt of parental allowance

The amendment to the law also changes the possibility for parents to receive basic parental allowance at the same time. For births on and after 1 April 2024, it will only be possible to receive parental allowance for a maximum of one month (instead of two months previously) and only within the first twelve months of the child's life. The new regulation only affects the receipt of basic parental allowance. If one parent receives Parental Allowance Plus, the other parent can also receive Basic Parental Allowance or Parental Allowance Plus for more than one month at a time.
Parents of premature babies or multiples as well as parents of newborn children with disabilities and siblings with disabilities for whom they receive the sibling bonus can continue to receive parental allowance in parallel as needed, especially for more than one month.

Additional services as benefits from employers

The new regulations will make it significantly more difficult for at least some employees to receive parental allowance. Employers can use this as an opportunity to increase their attractiveness by offering benefits, such as granting additional paid leave after the birth of the child (over and above the planned paternity leave). However, employers should take into account the prohibition of discrimination, especially if they plan to offset additional leave against statutory leave entitlements.