The National Assembly has approved a proposal to convert the existing tax reduction for elderly care expenses into a tax credit, benefiting both taxable and non-taxable individuals. Socialist MP Christine Pirès-Beaune argues this change promotes tax equity for dependent people, as current tax reductions only help those who pay taxes. However, concerns arise over the proposed measure’s high cost, estimated at 880 million euros, prompting skepticism about its feasibility and final inclusion in the 2025 Finance Bill.
In a notable development, the Socialists have shifted the narrative regarding the budget for 2025. During a public session in the National Assembly on Thursday, October 24, Members of Parliament (MPs) approved a proposal to convert the existing tax reduction for dependency and accommodation expenses related to care for the elderly into a tax credit. This change promises to have significant implications. Currently, the tax reduction provides a benefit of 25% on a maximum expense of 10,000 euros, translating to a maximum benefit of 2,500 euros. However, this tax benefit is only applicable to taxpayers.
To address this issue, Socialist MP Christine Pirès-Beaune proposed the transformation into a tax credit. This adjustment would allow individuals who are not liable for taxes to receive financial assistance from the government, something they cannot currently access under the existing tax reduction system. For instance, consider a dependent individual eligible for a 2,000 euro reduction who has no taxable income. Under the current regulations, this person would gain no financial benefit. However, if the rule shifts to a tax credit, that individual would receive a 2,000 euro reimbursement from the tax authorities.
Pirès-Beaune emphasized the need for tax fairness, arguing, “We can’t have a situation in the same EHpad where individuals with pensions of 3,000 euros receive tax support alongside those earning less than 1,000 euros who are left without assistance.” She made this statement in front of fellow parliamentarians and ministers.
However, implementing this measure is not without challenges. Charles de Courson, the general rapporteur for the Finance Committee, raised concerns about financing this change, stating, “While I appreciate Christine Pirès Beaune’s proposal, I wonder how we fund this.” Converting the tax reduction into a credit is estimated to cost around 880 million euros, a sum significantly higher than what is currently spent on the tax reduction. This tax reduction scheme, as noted in a recent amendment proposed by Socialist MPs, cost 272 million euros in 2023 and provided benefits to approximately 424,000 elderly individuals.
Given these financial implications, Laurent Saint-Martin, the Minister for Budget and Public Accounts, expressed a negative assessment of the amendment’s adoption, stating, “We cannot solely address out-of-pocket expenses and dependency financing from a tax perspective. We must consider how to finance transforming the tax reduction into a tax credit.”
“At home, you are eligible for this tax credit”
The passage of Christine Pirès Beaune’s amendment follows previous endorsements from the National Assembly’s Finance Committee. During discussions, Communist MP Nicolas Sansu from Cher supported the amendment by highlighting the disparity between those living in institutions and those at home: “When you’re at home, you’re entitled to this tax credit, showcasing the inequality present.”
This measure has been previously considered during legislative discussions regarding the finance bill, yet it has not always made its way into the final published text. The proposed change transforming the tax reduction into a credit for EHpad and USLD residents has faced challenges in past sessions, notably with the government invoking article 49-3 under Prime Minister Élisabeth Borne in 2022 and 2023, which could hinder its approval. Therefore, while the National Assembly has passed this amendment, its inclusion in the final 2025 Finance Bill remains uncertain.