How are child benefit and the child allowance related?

The same conditions apply for the allowances as for the entitlement to child benefit: there must be a parental relationship, the child must belong to your household and be under 18 or meet the conditions for the extended entitlement to child benefit.

The annual child allowance for parents who are jointly assessed for tax purposes is 6.024 Euro, and the BEA allowance (for care, education and training) is 2.928 Euro. Thus, parents are entitled to a total allowance of 8.952 Euro per child for the tax year 2025. For separately assessed or single parents, each parent is entitled to half of the allowance.

As part of the income tax assessment, the tax office automatically checks whether the tax relief through child allowances is more favourable than the child benefit. The decisive factor is the entitlement to child benefit, not the actual payments received. This comparison is called the favourability test (§ 31 EStG). You do not need to calculate anything yourself.

Problem: Child benefit applied for too late

In many cases, parents miss out if they have not applied for child benefit in time. Because:

• Child benefit not paid out is counted as an entitlement in the favourability test.
• A retroactive payment is legally limited to six months (§ 66 Abs. 3 EStG).
• This means that both the child benefit and the tax allowances are forfeited – even though there was an entitlement.

Change in law brings improvement

A change to § 31 EStG as part of the Act Against Illegal Employment and Benefit Fraud now takes into account whether the child benefit was actually paid out. If it was applied for too late and not paid out, the mere entitlement no longer counts – this allows parents to benefit from the child allowances despite late application.