Child Tax Credit Income Limit: Having Two Children Leads to Strict Calculations
Child Tax Credit Income Limit: Having Two Children Leads to Strict Calculations
Many families with two children are under financial strain—especially when their income is just above the poverty line. The child supplement can provide exactly the support needed to make a noticeable difference in daily life. But who is eligible? And what is the maximum income limit to qualify for the benefit? In this article, you’ll learn what income limits apply in 2025 for families with two children—explained clearly and simply, with real-life examples.
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What is the child supplement?
The Child Supplement is a monthly payment from the government designed to help prevent child poverty in Germany. It is intended for families with low or moderate incomes. The supplement is paid in addition to child benefit and helps single parents or couples ensure their children’s financial well-being when their income as low-income earners is insufficient to do so.
The aim is to prevent families from having to apply for the basic income supplement—formerly known as Hartz IV—solely because of their income situation, in order to cover their family’s living expenses. To qualify for the supplement, you must be receiving child benefit, and your income must be above a minimum threshold but below the total amount your family needs to live on.
💡Good to know: The benefit is initially granted for six months. After that, you’ll need to submit a renewal application so that your eligibility can be reviewed—especially if there have been changes in your income or housing costs. So make sure to plan ahead and gather the documents you’ll need for the renewal. This will ensure you receive uninterrupted support.
How much will the child allowance be in 2025?
Since January 2025, the child benefit supplement for parents has been up to 297 euros per child per month. That is the maximum amount you can receive—in addition to child benefit. The exact amount you are entitled to depends on various factors, such as your income, housing costs, and the number of children living with you.
The supplement is not paid as a lump sum. If you earn more, the amount is gradually reduced—until it is no longer paid at all. This model ensures that work remains worthwhile and that no one goes without benefits just because they earn a few euros too much.
If you have two children and your income is just above the minimum income threshold, you can receive up to 594 euros per month in child supplement. This is in addition to the 255 euros per child per month in child benefit. Together with the child supplement, this amounts to up to 1,104 euros per month in financial support.
💡 Tip: Using the Federal Employment Agency’s “KiZ-Lotsen” tool, you can easily check online and anonymously, using a calculator, how much you might be eligible to receive.
The key requirements at a glance
To receive the child supplement, certain requirements must be met. Many families whose income is only slightly above the basic income support level are eligible—without even realizing it. Especially for families with two children, this assistance can make a noticeable difference.
You must meet the following requirements:
- Eligibility for child support The child allowance is paid only for children under the age of 25 for whom you Child Support You can apply for and receive this benefit starting from the birth of your child until they turn 26, as long as they live in your household. Starting on their 18th birthday, they must also be enrolled in school, vocational training, or college—or be in an eligible transition period between two educational stages—for your eligibility for the child benefit to continue.
- The income is not enough to cover the family's needs Your income must be above the minimum income threshold—but not high enough to cover your family’s entire needs. In other words, you can support yourself financially, but your income isn’t enough to fully cover your children’s needs. The child supplement is designed to bridge exactly this gap.
- Asset limits must not be exceeded Income is not the only factor considered when calculating eligibility. If you or your partner have significant assets—such as savings, real estate, or valuables—this may disqualify you from receiving the child supplement. The exact asset threshold depends on the size of your household and the age of your children. ❗Important: A small savings balance is allowed—you shouldn’t be penalized for planning for the future. However, larger amounts may be taken into account. Are you wondering how an Invest4Kids policy might affect your child allowance? In most cases, your entitlement remains unchanged—but it’s still worth taking a personalized look at your income, assets, and goals. That’s why you should get personalized advice on which solution best suits your family—our initial consultation is free.
- The minimum income must be met Your income must not be too high, but it must not be too low either. To qualify for the child supplement, you must meet at least the so-called minimum threshold:
- For couples: at least 900 euros gross per month
- For single parents: at least 600 euros gross per month
- This income must come from employment, Unemployment Benefit I, sick pay, or certain social benefits. If you earn less than this, you are unfortunately not eligible for the child supplement, as you would then be considered “not financially self-sufficient”—and would instead be eligible for the citizen’s income.
- No simultaneous receipt of basic income If you or your partner receive the basic income, you are not eligible for the child supplement, because the basic income already includes benefits for children. Exception: If you are only eligible for the basic income for a short period and meet all the requirements for the child allowance (KiZ), you should contact the family benefits office directly for advice.
If you meet all of these requirements, you are eligible for the child supplement and can apply for this financial assistance.
❗Important: Many parents are reluctant to apply because they believe they “earn too much anyway.” But it’s often worth taking a closer look, especially if you have two children. After all, there’s no one-size-fits-all answer to whether your income is actually too high—it can only be determined through an individual calculation.
The key issue with two children: the income limit
If you have two children and want to find out whether you’re eligible for the child supplement, one figure is particularly important: your monthly gross income. This is because the amount of your income—and how it compares to your family’s needs—determines whether you’re eligible and how much support you’ll receive.
For families with two children, the situation is often particularly tight: they must exceed the minimum income threshold, but they must not exceed the total needs threshold. That is the crucial balance.
Example: Here's how it works in practice
Imagine that you and your partner earn a combined gross income of 1,800 euros per month—leaving you with about 1,350 euros after taxes. Your rent, including utilities, is 1,000 euros. For your two children, you receive 255 euros in child benefit per child, for a total of 510 euros.
In 2025, the government set the standard allowance for a couple at 1,012 euros; in addition, there is 2 × 390 euros for children between the ages of six and 13. Together, this amounts to a basic allowance of 1,792 euros. When you add the rent (including utilities), your family’s recognized monthly allowance comes to 2,792 euros.
Your disposable income—€1,350 in net earnings plus €510 in child benefit = €1,860—leaves a shortfall of €932. The child supplement can be up to €297 per child, for a maximum of €594. If you receive the maximum amount, the shortfall drops to €338. A realistic housing allowance of around 400 euros covers the rest.
This covers all your needs without having to apply for a basic income. This example briefly illustrates how child benefit and housing allowance work together to ensure that your family can make ends meet despite high housing costs.
No fixed maximum income limit: The calculation model
Since 2020, there have been no fixed upper limits; instead, a so-called sliding scale calculation model is used. This means:
- The higher your income, the lower the child allowance will be.
- Once income is high enough to cover the family’s entire needs, the entitlement ceases entirely.
- The exact amount is calculated on an individual basis, taking into account costs such as rent, heating, childcare, and other factors.
Especially with two children, the transition period is relatively long—you won’t lose your supplement right away if your income goes up a bit, but the amount will decrease gradually.
💡 Important: Even if you earn more than the minimum threshold, your actual entitlement can vary significantly depending on where you live, the amount of your rent, and any child support payments.
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What counts as parental income?
Whether you are eligible for the child supplement—and, if so, how much—depends largely on your family’s income. But what exactly counts as “income”? Not every payment is taken into account—and some benefits only count partially. To help you keep track, we’ve compiled a list of the most important types of income here.
The following income is taken into account:
- Wages and Salaries: Everything you earn from your work—including vacation pay, Christmas bonus, and shift premiums.
- Parental leave pay (pro-rated): Depending on the amount and method of calculation, parental allowance may be partially taken into account.
- Unemployment Insurance I: Is fully counted as income.
- Sick pay and maternity pay: These are also included in taxable income.
- Child support payments: Both child support and spousal support are included.
- Pensions and retirement benefits: Such as an orphan's pension, a half-orphan's pension, or a disability pension.
- Income from self-employment: Income from self-employment also counts.
- Rental or interest income: Income from rental properties or investment assets is also taken into account.
The following income is excluded:
- Child Support: This is explicitly not counted as income—this is important because it is a requirement for the child supplement.
- Child Supplement Itself: Of course, this won't be counted twice.
- Housing allowance: This is considered a supplementary benefit and does not preclude eligibility for KiZ.
- Your children's BAföG benefits: If your children receive BAföG, it is generally not counted as your income.
The Family Benefits Office reviews your gross income but takes certain deductions and standard allowances into account before performing the actual calculation. Therefore, it is entirely possible that you may still be eligible for a child supplement even if your income is supposedly “too high”—especially if you have two children and high housing costs.
💡 Tip: Even though your income is generally taken into account, certain deductions are allowed—such as for work-related expenses, contributions to retirement savings, or commuting costs.
How do I apply for the child supplement?
Applying for the child supplement is easier than many people think—especially if you know what documents you need and what matters. The Family Benefits Office of the Federal Employment Agency is responsible for processing your application. They will review whether you meet all the requirements and determine the amount of your benefit.
Here's how to do it step by step:
- Perform an online check (optional, but recommended) Before you submit your application, you can use the Federal Employment Agency’s KiZ-Lotsen tool to conduct a non-binding preliminary assessment. The tool will show you in just a few minutes whether you are likely to be eligible.
- Submit your application online or in writing You can easily apply for the child supplement online through the Family Benefits Office’s portal, or download the form and submit it by mail. The online application provides all the important information and guides you step by step through the questions.
- Have important documents ready To submit a complete application, you will need:
- your Identification card or passport
- Child Benefit Number
- Proof of income (e.g., pay stubs from the past few months)
- Proof of rent and heating costs (e.g., lease agreement, utility bill)
- if necessary BAföG award letters, Proof of child support payments or decisions regarding other benefits
- 👉 Important: The information provided in the application must be complete and verifiable. Income that cannot be substantiated will not be taken into account—or, in the worst case, may result in the application being denied.
- Please wait for processing It may take several weeks to review your application. As soon as a decision has been made, you will receive written notification—with approval for up to six months.
- Don't forget to submit a follow-up request Since the grant is always awarded for a limited period only, you must submit a renewal application in a timely manner to ensure uninterrupted payment. Ideally, you should submit the new application before the current period expires.
An incomplete application will significantly delay processing. So make sure you don’t leave anything out—it will save you time and hassle.
Conclusion: Make the most of the child allowance
The child supplement provides significant relief for families with two children when income is tight and high housing costs are a burden. Therefore, carefully review your income, assets, and eligible deductions, and use child benefits, the supplement, and housing assistance to make the most of government support—without having to apply for a basic income.
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