Czech government approves tax allowance for children for 2021

In July 2021, the house of deputies gave the definite green light to raising the tax allowance for parents of two or more children. The allowance for one’s first child remains unchanged.

The child allowance may be invoked for each dependent child. Only one parent can claim this tax credit for a particular child in the family. The condition remains in place whereby the child must be a dependent child living in the same household as the taxpayer. The benefit may moreover be claimed for children up to the age of 26 if they are a full-time student.

The increase of the tax relief from July 2021 onward applies to families with multiple children. Parents with only one child are not eligible. The benefit for the first child in 2021 will amount to CZK 15,204 for the whole year, i.e., CZK 1,267 per month.

For the second child, the tax benefit will increase from CZK 19 404 to CZK 22 320 per year.

For the third and each additional child, the tax benefit increases from CZK 24,204 to CZK 27,840 per year.

The increased amounts can only be claimed for the first time (retroactively for the full year of 2021) in the annual wage tax settlement for 2021 (to be performed in 2022) or in the tax return for the tax year 2021.

If the parent meets the eligibility requirement for the entire year of 2021, they will receive the benefit for the full year. If they are eligible only for part of the year or some months, the allowance will be prorated accordingly.

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