Austrian taxpayers with children face these questions when filling out their tax returns: In which way does the Austrian income tax law make allowances for expenses for raising children? How are the incurred expenses compensated? Which requirements have to be fulfilled?This thesis sees into the measures, which are implemented into the Austrian tax system, to compensate the expenses for children and family. Since expenses limit the ability to pay taxes, they have to be included in the taxation of income. The deployed measures are tax exemptions and tax deductions. These two types of measures develop different effects for the taxpayers.Tax exemptions are deducted from the total amount of income, which is the taxable base. The resulting effects are income-related and their impact differs from taxpayer to taxpayer. Tax deductions, on the other hand, are deducted from the tax liability. Therefore, the impact on all taxpayers is equal. Fiscal instruments aiming at the tax relief for families include the single earner tax allowance, the lone parent tax allowance, the child maintenance tax allowance, the child tax credit, allowance for extraordinary expenses, certain clauses of special expenses, the child allowance and the tax-free benefit of the employer for childcare. The Austrian tax reform of 2009 has implicated essential modifications of tax reliefs for taxpayers with children. This thesis analyses these modifications and examines the impact on raising children in Austrian income tax law.