Deduction, tax reduction, tax credit: what differences?
Verified 01 January 2023 - Directorate for Legal and Administrative Information (Prime Minister)
Video - Do you know the differences between tax reduction, tax credit and tax deduction?
There are several ways to reduce your income tax.
One deduction is an amount withdrawn from your taxable income.
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 one of the following incomes:
- Your total gross income (for example, deduction of child support)
- One of your categorical income (for example, deduction of professional expenses from your salaries and wages)
One tax reduction is an amount deducted from your tax (for example, tax reduction for donations to general interest organizations).
It only applies if you have to pay taxes.
You have donated to an association that entitles you to a tax reduction of €700.
If your tax is €1,500Well, then you'll only pay €800.
If you don't pay income tax, you can't benefit from the tax cut.
If you pay little, you can only benefit from a portion of the tax reduction.
For example, if you are entitled to a tax reduction of €700, but that you must €500 of tax, the surplus of €200 is "lost".
One tax credit is also an amount deducted from your tax (for example, child care expense tax credit).
Unlike the tax reduction, the tax credit is refunded to you in whole or in part in the following cases:
- It exceeds your tax
- You're not taxable
You are entitled to a tax credit €700 for your child care expenses. If you only need €500 tax services will then reimburse you for the surplus of €200.
sums less than €8 are not reimbursed.
Who can help me?
Find who can answer your questions in your region
- General Tax Code: Article 1965 LNon-repayment of tax claims of less than €8
- What is the difference between a tax cut and a tax credit?Ministry of Finance
- I declare my tax cuts and creditsMinistry of Finance
- 2022 Practice Brochure - 2021 Income Tax ReturnMinistry of Finance