Tax bonus for parents raised

The amount parents can claim as a "tax bonus" per child will rise in the next two years to €140 a month - although for older children the amount will be less - after an amendment to the Income Tax Act was passed in parliament on December 6.

But both municipalities and self-governing regions have criticised the increase, as the higher tax bonus will be funded from money which would have gone to towns and self-governing regions.

The shortfall due to the increased tax bonus was recently calculated by municipalities at €784 million, and local authorities have warned the government that people could receive worse services or pay higher fees as a result of the change.

On Tuesday, MPs approved legislation under which municipalities will receive €228 million more next year from corporate income tax, and €236 million more in 2024. Self-governing regions will receive an additional €97.7 million next year and €101 million in 2024.

Last month, parliament also approved higher child allowances. From January 2023, families will receive a monthly child benefit of €60 per child, up from the current €30.

Another increase in tax bonus

For parents of children under 18, the tax bonus will be increased to a maximum of €140 a month, but it will be no more than €50 for older children. These amounts will apply in 2023 and 2024.

In 2025, the tax bonus for younger children will drop to €100, according to the Sme daily.

The measures are part of a “pro-family” package of legislation drafted by Finance Minister Igor Matovič of the ruling OĽaNO party.

The package also includes a one-time increase in child allowance to €106 when a child first starts their first year of primary school.

Six child limit

The amount of the tax bonus a parent can claim depends on the number of children they have and their salary. For example, with one child, the tax bonus can be no more than 20 per cent of half of their income tax base, i.e. 86.6 per cent of their gross salary.

For two children, the bonus is 27 per cent, for three children a maximum of 34 per cent, for four children 41 per cent, for five children 48 per cent and for six children a maximum of 55 per cent of half the tax base.

Former labour minister Jozef Mihál has published figures on how much a parent could claim for 2023.

Example:

An employee has a gross salary of €600. They have two children aged 3 and 5. The tax bonus is counted as 2 x €140 = €280, but at the same time it can be at most €140.29, that means the tax bonus is €140.29.

Since July, many parents have not been able to claim the full amount of the tax bonus, as they have a low income and therefore a low partial tax base, Denník N wrote. The approved amendment to the Income Tax Act will allow the income of both parents - employees to be taken into account when claiming the tax bonus, but only when filing the tax return in early 2024.