Deduction, tax reduction, tax credit: what are the differences?

Verified 01 January 2026 - Public Service / Directorate of Legal and Administrative Information (Prime Minister)

Income tax: 2026 income tax return for 2025

This page is up to date at 1er January 2026.

However, forms, online services and information materials are not yet available for the 2026 tax year of the 2025 tax return. They will be put online as soon as they are available.

In addition, the draft budget law for 2026 could not be promulgated before 1er January 2026.

The law n°2025-1316 of 26 december 2025 The Special Authorizes the Government to Collect Taxes, Without Modifying the Scales, Until the Adoption of a Budget Law for 2026.

If the Finance Law for 2026 changes the rules presented on this page, the content will be updated after the publication of the Finance Law in the Official Journal.

Deduction, tax reduction and tax credit are tax benefits. They reduce the amount of income tax you have to pay. We explain the differences between these 3 devices.

Several devices may reduce the amount of your tax on income.

These are tax benefits granted based on your situation.

Video - Do you know the differences between tax reduction, tax credit and tax deduction?

Vidéo - Taxes - Tax Benefits
Credits : Public Service (DILA)

Text version

Taxes

Tax reduction, tax credit, tax deduction, what's the difference?

 

Do you know that several devices can reduce your tax bill?

This can be, for example, a tax reduction for donations to an association, a tax credit for home employment, or a tax deduction for the payment of alimony. 

 

In concrete terms, what are the differences between these 3 tax advantages?

Don't panic, let's explain!

 

First of all, what is a tax deduction?

 

It's a sum that's taken out of your taxable income.

Let us take an example. You have an income of €10,000 and a tax deduction of €1,000. You will then be taxable only on 9,000 €.

The deduction can be made on your overall income.

For example, the deduction of child support that you pay to a child of full age.

The deduction can also be made on a class of income.

For example, your professional expenses are deducted from your salaries.

 

The tax deduction should not be confused with the tax reduction.

 

The tax reduction is an amount deducted from the amount of your tax.

For example, you have made a donation to an association that entitles you to a tax reduction of €700. If your tax is €1,500, then you will only pay €800.

But if you're tax-free, you can't benefit from it.

And if you're low-tax, you only get part of the discount.

For example, if you are entitled to a tax reduction of €700, but you owe €500 in tax, the surplus of €200 is “lost”.

 

And a tax credit, what is it?

 

It's also a subtract from your tax.

If the amount of the tax credit exceeds the amount of your tax, the surplus is refunded to you.

However, if you do not pay tax, the tax authorities will refund the amount of your tax credit.

For example, imagine that you are entitled to a tax credit of €700 for your childcare expenses. If you owe €500 in tax, the tax authorities will refund the excess of €200.

Only one exception, sums less than 8 € are not refunded.

 

In summary

 

+ A tax deduction is an amount withdrawn from your taxable income.

+ A tax reduction is an amount deducted from your taxes (if you pay any).

+ A tax credit is also deducted from your tax, or refunded if the amount exceeds your taxes (or if you do not pay any).

One deduction is a tax benefit.

It is a sum that is removed of your taxable income.

Example :

You have an income of €10,000 and a tax deduction of €1,000.

You will be taxable only on €9,000.

The deduction may be made on any of the following income:

You report your expenses as deductible on your income tax return.

Tax services may ask you to justify your expenses.

One tax reduction is a tax benefit.

It's a sum deducted the amount of your tax.

This is, for example, the case for the following devices:

It applies only if you have a tax to pay.

Example :

You have made a donation to an association that entitles you to a tax reduction of €700.

If your tax is €1,500, you will only pay €800.

If you do not pay income tax, you cannot benefit from the tax reduction.

If you pay little, you can benefit only of a part the tax cut.

Example :

If you are entitled to a tax reduction of €700, but that you must €500 of tax.

The surplus of €200 is ‘lost’.

You report your eligible expenses on your income tax return.

Tax services may ask you to justify your expenses.

One tax credit is also a tax advantage;

It's also a sum subtracted the amount of your tax.

This is, for example, the case for the following devices:

Unlike the tax cut, the tax credit is yours refunded in whole or in part in the following cases:

Example :

You are entitled to a tax credit of €700 for your childcare expenses and you only have to €500 of tax.

The tax services reimburse you the surplus of €200.

If you are not taxable, tax services will refund your full tax credit.

Example :

You are entitled to a tax credit of €700 for your child care expenses and you do not pay income tax.

Tax services reimburse you €700.

FYI  

Amounts less than €8 are not reimbursed.

You declare your expenses eligible for a tax credit on your income tax return.

Tax services may ask you to justify your expenses.

If there are serious indications that may call into question the reality of your expenses, the tax services may require these justifications in a 30 days.

In the absence of a response from you or in the absence of supporting evidence, your tax will be calculated without taking into account these expenses, and therefore without the tax credit concerned.

In this case, it will be up to you to lodge a complaint.

Who can help me?

Find who can answer your questions in your region

  • For general information

    Tax Information Service

    By phone:

    0809,401,401

    Monday to Friday from 8:30 am to 7 pm, excluding public holidays.

    Free service + price call