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Tax-free amounts and dependants: how EU countries reduce income tax

By the EU Pay Concierge editor · 23 Oct 2026 · Figures computed live with the rules in force this month · How we calculate

Every EU country leaves part of a salary free of income tax, and most give extra relief for children or other dependants. The amounts are easy to find. What is harder to see is how they work, because a “tax-free amount” can be built in three different ways, and the same nominal amount can be worth very different sums in tax. This guide explains the three designs and shows them at work in the 2026 rules of several countries.

Three ways to make income tax-free

1. An allowance deducted from taxable income. The amount is removed from the income before the tax scale is applied. Its value in tax equals the allowance multiplied by the rate it would otherwise have been taxed at, so it is worth more to higher earners. Germany’s basic allowance and Romania’s personal deduction work like this.
2. A zero-rate band at the bottom of the scale. The first slice of income is taxed at 0%. Austria taxes the first €13,539 at 0%. The effect is similar to an allowance, but it is part of the scale itself.
3. A tax credit deducted from the tax. The tax is calculated on all income and the credit is subtracted afterwards. A credit is worth the same to everyone who pays enough tax to use it. Ireland, the Netherlands and Poland use credits. Spain uses a hybrid: the personal and family minimum is “taxed” at the scale and that amount is subtracted, which works like a credit at the lowest rates.

A further difference is whether an unused credit is paid out. Most are not: if the tax is smaller than the credit, the rest is lost. A few are refundable, such as the Polish child credit up to the contributions paid, and the Austrian negative tax for low earners.

The basic tax-free amount in selected countries

• Germany: the Grundfreibetrag of €12,348 is built into the § 32a tariff. Payroll also deducts the €1,230 employee lump sum and the €36 special-expenses lump sum.
• Poland: a tax-reducing amount of PLN 3,600 a year. Since the first rate is 12%, it makes the first PLN 30,000 tax-free.
• Ireland: a personal credit of €2,000 and an employee credit of €2,000. At the 20% standard rate they cancel the tax on €20,000 of income.
• Netherlands: a general tax credit (AHK) of up to €3,115, reduced by 6.398% of income above €29,736, plus a labour tax credit of up to €5,685. Both are split between income tax and national insurance premiums in a fixed ratio.
• Belgium: a tax-free amount of €11,550, valued at the lowest rates of the scale.
• Spain: a personal minimum of €5,550 for the state scale; the Comunidad de Madrid uses €5,956.65 for its own half of the tax.
• Romania: no general tax-free amount. Low earners on their main job get a personal deduction, explained below.

Children and dependants

Relief for children takes even more forms. Some countries pay it through the tax system and some through separate child benefit that never appears on a payslip.

• Germany pays child benefit (Kindergeld) of €259 a month per child outside payroll. In the annual assessment the tax office applies a child allowance of €9,756 per child instead, if that saves more tax.
• Austria grants the Familienbonus Plus, a credit of €2,000.16 a year per child under 18 and €700.08 per child aged 18 or over who still receives family allowance. Sole earners and single parents also get a credit of €612 for one child, €828 for two and €1,101 for three, plus €273 for each further child.
• Poland has a child credit of PLN 1,112.04 a year for each of the first two children, PLN 2,000.04 for the third and PLN 2,700 for the fourth and later. With one child it applies only below an income limit. Married couples and single parents can also file jointly, paying twice the tax on half the combined income.
• Spain raises the family minimum by €2,400 for the first child, €2,700 for the second, €4,000 for the third and €4,500 for each further child, with €2,800 more for each child under three. Madrid uses higher amounts.
• Belgium adds €2,130 to the tax-free amount for one child, €5,130 for two, €11,440 for three and €18,510 for four.
• Portugal deducts €600 per dependant from the tax, with increases for young children.
• Romania raises the personal deduction with the number of dependants and adds 100 lei a month for each child enrolled in school.

Worked example: Spain, single or with a family

The same €3,000 a month in Madrid, first for a single employee and then for a married employee whose partner has no income, with two children over three. The married employee files jointly, which removes €3,400 from the tax base and counts the whole family minimum.

For the single employee the state minimum is €5,550, and income tax comes to €513.13 a month (see the full single calculation in our guide to social contributions). For the family, the state minimum rises to €10,650: €5,550 for the employee, €2,400 for the first child and €2,700 for the second. Income tax falls to €355.22 and net pay rises from €2,291.87 to €2,449.78, €157.91 a month more. Contributions and the employer’s cost do not change.

Worked example: Romania’s personal deduction

Romania’s personal deduction is a percentage of the minimum wage (4,325 lei from July 2026), deducted from the income before the 10% tax. It is 20% with no dependants, 25% with one, 30% with two, 35% with three and 45% with four or more. The percentage falls by 0.5 points for every 50 lei of gross pay above the minimum wage, so it disappears 2,000 lei above it. It applies only on the employee’s main job.

At 6,000 lei, the salary is 1,675 lei above the minimum wage, which removes 17 percentage points. With two dependants the deduction is 30% − 17% = 13% of 4,325 lei, or 562 lei, and it reduces income tax by RON 56 a month. Without dependants the deduction would be 3%, or 130 lei, and net pay would be RON 3,523 instead of RON 3,566. The deduction is designed for low pay: at the minimum wage a single employee gets 20%, or 865 lei.

Allowance or credit: why the design matters

Poland shows the credit at work. At PLN 8,000 a month the tax on the scale is PLN 798.42 and the PLN 3,600 reducing amount takes PLN 300 off it, whatever the salary, as long as there is enough tax to absorb it. In Germany the same nominal allowance saves more tax for an employee in the 42% band than for one in the 14% band. When comparing countries, look at the tax actually saved, not at the size of the allowance.

Enter your own household in the calculators for Spain, Romania, Poland, Germany, Austria and Belgium. Each one asks only the questions that change the result in that country.

Calculators for this guide

• Spain salary calculator
• Romania salary calculator
• Poland salary calculator
• Germany salary calculator
• Austria salary calculator
• Belgium salary calculator
• Ireland salary calculator
• Netherlands salary calculator

More guides

• How net salary is calculated in Germany in 2026
• Employer cost vs gross vs net salary across the EU
• Social contributions explained: who pays what in Romania, Poland and Spain
• 13th and 14th salaries in the EU: who pays them and how they are taxed
• Tax reliefs for young workers in the EU: Poland, Portugal, Greece, Romania and Sweden
• What changes in EU payroll rules in 2027

This guide explains general rules. It is not individual tax, payroll or legal advice. Found an error? Write to us via the contact page.