Tax credit for single parents: €4,260 per year

Who is considered a single parent?

The law refers to “single” taxpayers. This means someone who cannot file a joint tax return with a spouse (or is widowed) and does not share a household with any other adult. In addition, there must be a child in the household for whom you are eligible to receive child benefit or the child allowance. For tax purposes, “single parent” means: one child, one household, no other adult—unless that other adult is a child for whom you are eligible to receive child benefit or the child allowance. An adult child who is in vocational training or pursuing a degree therefore does not count against the tax relief amount, nor does a child who is performing military or civil service.

A child is considered part of the household if he or she is registered at that address (Section 24b(1) of the Income Tax Act (EStG)). The tax authorities also take the child’s actual living situation into account: the child lives there, and the focus is on the child’s care and support. If the child is registered with both parents, the tax credit is granted to the parent who meets the requirements for receiving child benefit, or who would meet them if only the child allowance were applicable. It is therefore tied to the child benefit. It cannot be split between two households.

The child must be identified by his or her identification number; if the child is not subject to taxation, another suitable form of identification is sufficient. If the number is assigned at a later date—for example, in the case of a newborn or after moving from abroad—it is retroactively applied to the months during which the requirements were met.

How much is the tax credit?

The base amount is €4,260 per year. An additional €240 is added for each additional child (Section 24b(2) of the Income Tax Act (EStG)). The amounts will remain the same in 2025 and 2026. The tax relief amount applies in addition to child benefit or the child allowance. It does not replace either of them.

Technically, it is a deduction from total income. The €4,260 is therefore the amount deducted from income, not the amount that results in a lower tax bill. How much tax this saves depends on your income.

What changes does Tax Class II bring?

Tax Class II is the income tax class for single parents. It applies to employees who are eligible for the tax relief amount (Section 38b(1) of the Income Tax Act). The employer then includes the base amount of €4,260 in the monthly payroll tax calculation. The additional €240 for each additional child is not included in Tax Class II. It can be claimed as an exemption in the payroll tax deduction or on the tax return. The law explicitly counts this additional amount among the amounts from which the tax office calculates an exemption. Such a tax-free allowance is valid for a maximum of two calendar years starting from the year in which it first applies; after that, you must reapply for it. If your circumstances change, you can request an adjustment within this period.

The tax class is a factor used to determine payroll tax withholding. A more favorable tax class is assigned upon application to the tax office (Section 39(6) of the Income Tax Act (EStG)). It takes effect on the first day of the month in which the requirements were first met, meaning it applies retroactively within the year: Someone who becomes a single parent in February and submits the application in September will be assigned tax class II starting in February, with the income tax withholding adjusted accordingly. If the change is to take effect in the current year, November 30 is the deadline for submitting the application.

If something changes to your disadvantage—for example, because the requirements are no longer met—you must notify the tax office (§ 39(5) EStG). If you fail to do so, the tax office will automatically change your tax bracket and collect any underpaid withholding tax, provided it exceeds €10.

What are the rules if another adult lives in the household?

It then depends on whether the household is managed jointly. If the other adult is registered as having their primary or secondary residence in the apartment, the law presumes a shared household. This presumption is rebuttable. This presumption does not apply in the case of a marriage-like or civil partnership-like relationship (Section 24b(3) of the Income Tax Act).

The law specifies exactly two exceptions (Section 24b(3) of the Income Tax Act (EStG)): The other adult is someone for whom you are entitled to child benefit or child allowance, such as an adult child who is in vocational training or pursuing a degree. Or they are a child who is performing a service or carrying out a corresponding activity.

What are the rules if you switch during the year?

The tax credit is an annual amount calculated on a monthly basis. For each full calendar month in which the requirements were not met, it is reduced by one-twelfth (Section 24b(4) of the Income Tax Act). This applies both when another adult moves in and when a person becomes a single parent during the course of the year.

Even in the year of a separation, the amount is applied on a pro-rata basis. If spouses are permanently separated, the tax relief amount may be claimed from the month of separation through the end of the calendar year, provided the other requirements are met. The month of separation counts here—not just the first full month afterward: Someone who separates on March 20 is entitled to the months of March through December—that is, ten twelfths, not nine. Even those who were temporarily single during the year of their marriage may claim the deduction for those months.