Tax credit: definition, types and payment 2025

The tax credit is a tax relief system. Employing an employee at home, childcare costs for young children, etc. are all expenses allowing a taxpayer to obtain this tax advantage. How does it work? What are the conditions to benefit from it? Who is entitled to the tax credit? When is it paid in 2025? Answer.

Capital Video: What is a tax credit?

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How does the tax credit work?

The tax credit is an amount that is deducted from the income tax owed by a taxpayer. There are several types: the tax credit for employing an employee at home, for childcare costs, etc. If the amount of the tax credit is lower than the income tax due, it reduces the tax payable by the taxpayer. If the amount of the tax credit is greater than the income tax, the surplus or the entirety (if the taxpayer is not taxable) is reimbursed by the General Directorate of Public Finances.

What are the differences between tax deduction, tax reduction and tax credit?

Tax deduction: definition

The tax deduction is an amount withdrawn from taxable income. It can be removed from the overall gross income, for example in the case of deducting alimony. It can also be carried out on one of the category incomes, for example the deduction of real expenses from the salary.

Tax reduction: definition

The tax reduction is a sum deducted directly from the amount of tax and not from taxable income. It only applies to taxable persons. A tax reduction occurs, for example, when declaring a donation to an association when declaring your taxes. The tax reduction will be effective immediately.

Tax credit: definition

The tax credit, like the tax reduction, is an amount subtracted from the total amount of tax. It intervenes, for example, in the event of costs incurred by childcare. Unlike the tax reduction, the tax credit also allows a reimbursement from the tax administration in the following two cases:

• the amount of the tax credit exceeds that of the tax
• the person is not taxable

Tax credit for employing an employee at home

Example of services

The personal services tax credit allows the taxpayer to benefit from tax reductions for employing an employee at home. Here are some examples of these services:

• childcare at home,
• housework,
• academic support,
• pet care and walking,
• assistance to the elderly or disabled…

This tax credit is open to all active, non-active or retired taxpayers who incur expenses for personal services. Whether for their primary or secondary residence and whether they are tenants or owners.

Amount of the personal services tax credit

The tax credit amounts to 50% of expenses incurred for the provision of personal services within the limit of a ceiling which varies between 12,000 euros and 20,000 euros per year depending on your situation. The amount of these expenses must be declared by the taxpayer on line 7DB of the income tax return.

Tax credit for child care expenses

Conditions for the 2025 tax return

This tax credit applies to the care of young children under the age of six (care costs linked to crèche or childminder expenses). Can benefit from this tax credit, parents or grandparents who:

• have one or more dependent children under the age of 6 on January 1 of the tax year (for the 2025 declaration of 2024 income, he or she must be born in 2018 or later),
• have the child looked after by an approved childminder,
• have the child looked after by an establishment caring for children under 6 years old

To note : aid received for childcare, such as the free choice of childcare supplement or aid paid by the employer, must be deducted.

Amount of the 2025 tax credit

The amount of the tax credit for childcare costs is equal to 50% of the sums paid within the limit of the following ceilings.

Tax credit for donations made to organizations of general interest

The taxpayer can benefit from a 66% tax reduction on donations made to organizations of general interest, up to 20% of its taxable income. The amount of the income tax reduction for donations made to organizations helping people in difficulty providing free meals is 75% within the limit of 1,000 euros.

Tax credit for installation expenses for electric vehicle charging systems

Conditions for a single person and a couple

Taxpayers who incur expenses for the acquisition and installation of an electric vehicle charging system in their primary or secondary residence can benefit from this tax credit.

It is limited for a single person to a charging system for the same accommodation. And for a couple, two charging systems for the same accommodation. On condition of being subject to common taxation. Expenses related to the installation of the electric vehicle charging system must be paid from January 1, 2025 and the work must be invoiced before December 31, 2025 included. Expenses paid in 2025 must be declared in 2026.

Amount of credit for the installation of a terminal in 2025

The amount of the tax credit is equal to 75% of the amount of expenses and is limited to 500 euros by controllable charging system.

Tax credit for work to adapt housing to loss of autonomy linked to age or disability

Conditions to benefit from the housing adaptation tax credit

Taxpayers domiciled for tax purposes in France, owners or tenants, can benefit from this tax credit. In cases where, they carry out work in their main residence facilitating access for an elderly or disabled person or work to adapt the home to loss of autonomy or disability. For example :

• installation of ramps,
• anti-slip floor covering,
• motorization of equipment…

People who can benefit from it must also meet the following two conditions:

• be aged 60 and over
• have a disability rate equal to or greater than 50%

If a taxpayer considers that they meet the conditions to benefit from this tax credit, they must indicate the amount of expenses incurred in this regard in the corresponding box of their tax return to benefit from it. For expenses paid in 2025, the work must have been carried out before December 31, 2025.

Amount and ceiling of the tax credit for work

The tax credit rate is 25% of the total amount of expenses. The latter is capped at 5,000 euros for a single person and 10,000 euros for a couple subject to joint taxation.

When will the 2024 tax credits be reimbursed in 2025?

Payment mid-January 2025

A 60% advance tax credit, calculated on the basis of the previous year’s tax return, is paid in January. Then, based on the expenses actually incurred, the balance of the tax credits is paid in the summer.

Thus, in 2025, the 60% advance is calculated on the basis of the 2023 taxable income from the 2024 tax return. It will be paid January 15. With an average amount of 639 euros, it concerns more than 9 million households having benefited from credits and tax reductions in 2024. Payment is made by transfer, denominated “ADVANCE CREDIMPOT” directly to the taxpayer’s bank account.

Payment of the summer 2025 balance

The balance of the tax credit (the remaining 40%) will then be paid in summer 2025 after recalculation based on the tax return completed in spring 2025.