EHPAD Tax Credit Reform Shelved for 2026: Budget Keeps Current Tax Reduction

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Proposed Tax Credit for Long-Term Care Residents Faces Uncertainty

A potential shift to a refundable tax credit for individuals residing in long-term care facilities in France is facing headwinds despite widespread support for the concept. the proposed reform aims to make financial aid more accessible to both taxable and non-taxable income households covering the costs associated with assisted Living Facilities (EHPAD) and other dependent care settings.

Current System and Proposed Changes

Currently, france offers a tax reduction of 25% on accommodation and dependency costs, capped at €10,000 in expenses annually, translating to a maximum tax credit of €2,500 for those who pay income taxes. A significant drawback of the existing system is that it excludes individuals with no taxable income, leaving them reliant on existing social assistance programs like the Allocation Personnalisée de Logement (APL), the Aide Sociale à l’Hébergement (ASH), and the Allocation Personnalisée d’Autonomie (APA). The proposed change would convert this tax reduction into a refundable tax credit, providing direct reimbursement to all residents nonetheless of their tax status, effectively lowering out-of-pocket expenses.

This reform seeks to address what proponents call a “tax justice” issue, ensuring that low-income seniors and retirees have greater financial support for essential care. It also aims to alleviate the financial burden on families struggling with the high costs of nursing home care.

Financial Implications and Political Roadblocks

The estimated annual cost of implementing this refundable tax credit is approximately €880 million. This significant price tag has drawn criticism, particularly from the Minister of Budget and public Accounts, who favors broader structural reforms to the social safety net. Despite consistent advocacy in Parliament, the reform was not included in the 2026 finance law.

However, the issue is expected to resurface during future budget discussions, especially as the challenges related to financing long-term care become increasingly prominent in public discourse. France’s aging population and rising dependency rates are intensifying the pressure to find sustainable funding solutions for elder care.

Understanding Existing Support Programs

Alongside the potential tax credit, several existing programs offer financial assistance for long-term care. these include:

• APL (Allocation personnalisée de Logement): personalized Housing Assistance, helps with housing costs.
• ASH (Aide Sociale
  
  

  What are the current eligibility criteria for the EHPAD tax credit?

  EHPAD Tax Credit reform Shelved for 2026: Budget Keeps Current Tax Reduction

  The hotly debated reform of the crédit d’impôt pour l’emploi d’un aidant personnel à domicile (EHPAD tax credit) – the tax credit for employing an in-home caregiver – has been officially postponed for the 2026 fiscal year. The recently released national budget confirms that the current tax reduction rates will remain in place, offering continued financial support for families caring for elderly or disabled relatives. This decision follows months of intense discussion and lobbying from various stakeholders, including family associations, caregiver agencies, and political groups.

  What Dose This Mean for Families?

  For those currently benefiting from the EHPAD tax credit, this news provides a degree of stability. The existing system allows for a tax reduction of 50% of eligible expenses, up to a maximum of €12,000 per year – translating to a maximum tax credit of €6,000. This covers costs associated with employing a caregiver directly, or utilizing services from an approved service à la personne agency.

  The postponement means:

  * No immediate changes to eligibility criteria: The current rules regarding the age and dependency level of the beneficiary, and also the employer’s relationship to them, remain unchanged.

  * Continued access to existing tax benefits: families can continue to claim the 50% tax credit on qualifying expenses.

  * Delayed implementation of proposed changes: The proposed reforms,which included a tiered system based on income and a potential cap on the total amount claimable,are now on hold.

  Why Was the Reform Postponed?

  Several factors contributed to the government’s decision to shelve the EHPAD tax credit reform for 2026. primarily, concerns were raised about the potential impact on vulnerable individuals and families already struggling with the financial burden of long-term care.

  Arguments against the reform centered on:

  * Increased financial strain on families: Critics argued that reducing the tax credit, particularly for higher earners, would force families to reduce caregiver hours or seek less qualified, and potentially unsafe, care options.

  * Impact on caregiver employment: Concerns were voiced that a reduced tax credit could lead to job losses within the service à la personne sector.

  * Political pressure: Strong opposition from family advocacy groups and certain political parties played a significant role in influencing the government’s decision.

  the Ministry of Solidarity and Families acknowledged these concerns, stating that further analysis and consultation are needed before implementing any significant changes to the EHPAD tax credit system. They emphasized a commitment to finding a lasting solution that balances the need for fiscal responsibility with the imperative to support families providing essential care.

  Understanding Eligibility Requirements

  To qualify for the EHPAD tax credit, several conditions must be met. These include:

  1. the beneficiary’s age or dependency level: The person receiving care must be either over 60 years old or have a dependency level of at least 2 (as assessed by the grid d’évaluation standardisée des besoins d’aide à domicile – the standardized assessment grid for in-home care needs).
  2. The employer’s relationship to the beneficiary: Eligible employers include spouses, parents, children, siblings, and grandchildren.
  3. The type of services provided: Qualifying services include assistance with daily living activities (dressing,bathing,eating),household chores,and transportation.
  4. Proper declaration of employment: The caregiver must be officially declared as an employee, with all necessary social security contributions paid. Utilizing a service à la personne agency simplifies this process.

  Navigating the Service à la Personne System

  Employing a caregiver directly can be complex.Many families opt to use a service à la personne agency, which handles the administrative burden of employment, including payroll, social security contributions, and insurance. While this comes at a cost, it offers significant peace of mind and ensures compliance with labor laws.

  Key benefits of using a service à la personne agency:

  * Simplified governance: The agency handles all employment-related paperwork.

  * Guaranteed compliance: Agencies ensure adherence to labor laws and social security regulations.

  * Caregiver replacement: Agencies can provide a replacement caregiver if the original caregiver is unavailable.

  * Insurance coverage: Agencies typically carry insurance to cover potential liabilities.

  Real-World example: The Dubois Family

  The Dubois family,caring for their 92-year-old mother,Marie,relied heavily on the EHPAD tax credit. Marie requires assistance with daily living activities and has a dependency level of 3. The family employs a caregiver through a service à la personne agency for 20 hours per week. without the tax credit, the cost of care would have been considerably higher, potentially forcing them to consider institutional care – a scenario they were resolute to avoid. The postponement of the reform allows them to continue providing Marie with the care she needs in the comfort of her own home.

  Future Outlook & Staying Informed

  While the EHPAD tax credit reform has been shelved for 2026, it is likely to be revisited in the future.The government remains committed to finding a sustainable funding model for long-term care. Families should stay informed about any