Childcare allowance increasing: Up to €1,000 extra for average earners

The childcare allowance is increasing next year, the Ministry of Social Affairs and Employment announced on Wednesday. Parents with average incomes will benefit the most, getting almost 1,000 euros extra next year. It is a modest, intermediate step toward making childcare almost free for all working parents in 2027, NU.nl reports.

From January 1, households with an income between approximately 29,400 euros and 159,200 euros will receive a higher childcare allowance. The measure will cost 429 million euros and likely benefit several hundred thousand households. The allowance for the first child, for whom childcare costs the most, will increase by around 10 percent for parents with middle incomes.

A family that earns 45,000 euros per year and has one child in childcare currently gets 87.3 percent of childcare costs reimbursed. From January 1, that will be 96 percent.

Families with two working parents and two children in childcare two days a week will get up to 1,000 euros more next year. Such a household with an annual income of 63,100 euros gross will get 994 euros more in allowance in 2025. That will increase their disposable income by 1.5 percent, the Ministry calculated as an example.

From 2027, the government wants to cover 96 percent of childcare costs for all working parents, regardless of their income. Currently, working more hardly makes sense to some families because childcare costs more than the money they’d earn in the time their child spent there. The government hopes that, by making childcare near-free for everyone, more parents will put in more hours and help alleviate the widespread staff shortages in the country.

Thomas van Huizen, an economist at Utrecht University, warned that the government can’t expect a one-to-one gain with this measure. “If ten extra children go to childcare because of a higher allowance, roughly two extra mothers will go to work,” he told NU.nl. Parents will often exchange babysitting grandparents for an extra day at childcare, he expects.