The tax office (Finanzamt) compares child benefit (Kindergeld) with the child allowance (Kinderfreibetrag) for every child and applies whichever relieves the family more. The rule is set out in section 31 of the Income Tax Act (EStG). Higher amounts are proposed for 2027, but so far they are only a draft bill. This guide shows how the comparison works and which values apply today.
In short: In the income tax assessment, the tax office compares child benefit and child allowances and applies the more favourable relief (section 31 EStG). In 2026, EUR 259 of child benefit per month compares with EUR 9,756 of allowances. The draft bill for 2027 provides EUR 267 and EUR 10,056. It has not been enacted. Last updated: November 2026.
Key points
- A child’s subsistence minimum is exempted from tax either through child allowances or through child benefit (section 31 sentence 1 EStG).
- If the allowances work out better, the child benefit entitlement increases the scheduled income tax (section 31 sentence 4 EStG). You keep the payment but receive the higher relief.
- Mathematically, the allowances only pay off once the marginal tax rate exceeds about 31.9 percent. This is a simplified benchmark.
- For 2026, EUR 259 child benefit and EUR 9,756 of allowances apply to jointly assessed parents.
- For 2027, EUR 267 and EUR 10,056 are only part of the draft bill. Deliberation in the Bundestag is ongoing.
What does the Günstigerprüfung mean for child benefit and child allowance?
The state exempts a child’s subsistence minimum from tax. Section 31 sentence 1 EStG provides two routes: the child allowances under section 32 (6) EStG, or child benefit. The family benefits office (Familienkasse) pays child benefit monthly during the year as a tax rebate. To the extent it is not needed for the exemption, it serves to support the family (sentence 2).
The term Günstigerprüfung (more-favourable-treatment test) does not appear in the statute; it describes the comparison. In the assessment, the tax office calculates income tax after deducting the allowances. If child benefit does not fully achieve the exemption, the child allowances are deducted, and the scheduled income tax increases by the child benefit entitlement (sentence 4). The result is the more favourable route. Parents do not make a choice; the comparison follows from the statute.
Which amounts apply in 2026 and which are planned for 2027?
The figures for 2026 are set out in the law. The values for 2027 and 2028 come from the draft Income Tax Reform Act 2027, which the Bundestag debated in a first reading on 8 October 2026 and referred to committees (printed paper 21/8235). The Finance Committee leads. Dates for the second and third readings are not known.
| Year | Child benefit per child and month | Child benefit per year (calculated) | Allowances, both parents, per child | Status |
|---|---|---|---|---|
| 2026 | EUR 259 | EUR 3,108 | EUR 9,756 | current law |
| 2027 | EUR 267 | EUR 3,204 | EUR 10,056 | draft bill |
| 2028 | EUR 272 | EUR 3,264 | EUR 10,236 | draft bill |
The 2026 allowances consist of EUR 3,414 child allowance and EUR 1,464 allowance for care, upbringing or education per parent. For jointly assessed spouses they double (section 32 (6) EStG). According to the draft bill, as the Bundestag page on the first reading reports it, the child allowance rises in 2027 from EUR 6,828 to EUR 7,128, and the total child subsistence minimum from EUR 9,756 to EUR 10,056. The 2028 values in the table come from the government draft.
From which tax rate do the allowances pay off?
The allowances reduce taxable income. Their value therefore depends on your marginal tax rate, the rate applied to your last euro earned. Child benefit, by contrast, is the same for all families. The break-even is where the tax relief from the allowances equals one year of child benefit.
Assumption: The marginal rate is the same across the whole allowance, and solidarity surcharge and church tax are ignored. For 2026 this gives the quotient of EUR 3,108 child benefit and EUR 9,756 allowances, about 31.9 percent. For 2027 under the draft, EUR 3,204 and EUR 10,056 also give about 31.9 percent. This is a benchmark. The tax scale rises in steps, and the tax office calculates exactly.
| Marginal tax rate (assumption) | Usually better | Reason |
|---|---|---|
| below 31.9 percent | Child benefit | The relief from the allowances stays below the child benefit. |
| about 31.9 percent | equal | Both routes lead to the same result. |
| above 31.9 percent | Allowances | The relief from the allowances exceeds the child benefit. |
For a concrete net calculation, use the contributions calculator of the Federal Ministry of Finance (bmf-steuerrechner.de). No wage tax in euros is calculated here, because it depends on tax class, allowances and other factors.
What applies to children in university or training?
A child over 18 is taken into account if the conditions of section 32 (4) EStG are met, for example during training or studies up to age 25. After a completed first training or first degree, entitlement applies only if the child has no or limited employment. Employment of up to 20 hours per week, a training employment relationship and a mini-job are harmless. As long as the child is taken into account, the comparison works as for younger children.
If you look at this from the perspective of the student child, the conditions are in our guide Child Benefit During Studies and Master’s: Rules and Limits.
Special cases under section 31 EStG
- Child benefit months in which an entitlement was determined but not paid out under section 70 (1) sentence 2 EStG are disregarded in the comparison (sentence 5).
- For benefits comparable to child benefit, the add-back applies accordingly (sentence 6).
- If foreign law grants child benefits, they are taken into account only to the extent they exceed German child benefit (sentence 7).
Frequently asked questions
Do I have to apply for the Günstigerprüfung?
The law does not give parents a choice. The comparison is part of the income tax assessment. For it to take place, you need an assessment, which usually means a filed tax return.
Do I lose child benefit if the allowances are better?
No. The child benefit is paid out, and the scheduled income tax increases by the child benefit entitlement (section 31 sentence 4 EStG). You end up with the higher relief of the allowances, and the child benefit is offset within it.
Does the comparison also apply in 2027 with the new amounts?
The principle remains unless the draft provides otherwise. The higher amounts of EUR 267 and EUR 10,056 only become applicable once the law is passed.
Why does the break-even stay almost unchanged at 31.9 percent?
Because child benefit and allowances rise at about the same rate under the draft. Child benefit in 2027 grows by about 3.1 percent and the allowances by about 3.1 percent, each calculated from the values above.
What to do now
- Check whether your child meets the conditions of section 32 EStG for 2026, in particular the age limit and training.
- File your tax return, because the comparison only takes place within the assessment. Deadlines for 2026 are in our guide on the 2026 tax return.
- Check your tax assessment to see whether child allowances and child benefit were taken into account.
- Follow the legislative procedure for the Income Tax Reform Act 2027 before you count on amounts for 2027.
Related guides
- What changes in 2027 for taxes? The overview
- Child allowance 2027: what the government draft provides
- Child Benefit for Students: Eligibility and Application
- Tax Return for Students: How to Get Your Money Back
If you want to review your family’s insurance cover as a whole, a personal consultation with Academycon is available. The tax calculation itself is a matter for the tax office or a tax adviser.
Sources: Section 31 EStG (in German) (as of November 2026), Section 32 EStG (in German) (as of November 2026), Section 66 EStG (in German) (as of November 2026), German Bundestag, income tax reform 2027, first reading on 8 October 2026 (in German) (as of November 2026).
Last updated: November 2026. This guide is general information, not individual advice.
