In the context of preparation of the budget for 2026, Amélie de Montchalin, the Minister of Public Accounts, has indicated that the government is considering significant changes to the tax credit for domestic home help services.
The tax credit currently covers various domestic services, including childcare, tutoring, meal preparation, elderly assistance, housekeeping, gardening, minor home repairs, and home IT support. It can be claimed by directly engaging a salaried person, or through a service provider. Over 4 million households are beneficiaries.
The credit allows for a 50% deduction on related expenses, up to an annual limit of €12,000, which can be increased to €18,000 under certain conditions. It is payable, irrespective of the level of income tax (if any) to which a recipient may be liable.
The tax credit costs the state €6 billion a year, the largest tax break on offer, save that for research. The government is reviewing all niches fiscales to find €40 billion in savings or increased revenues, with potential reductions in the tax credit rate or the ceiling for ‘non-essential’ domestic services.
The national auditor, the Cour des Comptes, has recommended lowering the credit rate to 40% and reducing the ceiling to €3,000 for ancillary services.
During a parliamentary hearing, Montchalin did not rule out refocusing the tax credit exclusively on young parents and dependent individuals.
The future of tax benefits for various home services therefore remains uncertain, although the government will need parliamentary support for any changes. While childcare and elderly assistance are confirmed to retain support, other services like housekeeping and gardening may face a reduction or elimination.
The government must also consider the potential impact on employment and the risk of increasing undeclared work. The employer’s association for domestic services, the Fédération française des services à la personne et de proximité, stated in response to the announcement that: “When undeclared work is cheaper than undeclared work, consumers turn to hidden work. If the tax is reduced, the French will very probably declare up to the height of the ceiling and opt for hidden work when it is exceeded."
They claim that the tax break generates more in revenue than it costs stating that "each €1 tax credit generates between €1.20 and €1.50 in tax and social revenues".
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