Many German taxpayers are missing out on significant tax breaks for household-related services, a provision outlined in § 35a of the Income Tax Act (EStG). Even as the law allows for tax deductions on expenses related to domestic aid, household services and skilled trades, uptake remains surprisingly low.
The tax relief, as detailed in the EStG, varies depending on the type of service. For minor employment relationships – those classified as “geringfügige Beschäftigung” under § 8a of the Fourth Book of the Social Code – taxpayers can deduct 20 percent of expenses, up to a maximum of €510. For other household employment or services, the deduction is also 20 percent, but with a higher cap of €4,000. This includes expenses for care and support services, as well as costs associated with living in a care home where those costs cover services comparable to household help.
Home improvement also qualifies for tax relief. A 20 percent deduction, capped at €1,200, is available for expenses related to renovation, maintenance, and modernization function carried out by qualified tradespeople. However, this benefit does not apply to publicly funded projects that already receive subsidies or low-interest loans.
The regulations, as outlined by the Federal Ministry of Finance, specify that the tax reduction is applied to the marginal tax rate, reduced by any other tax credits the taxpayer may be eligible for. Taxpayers must actively apply for the deduction when filing their income tax return.
Despite the potential savings, awareness of § 35a remains limited. Experts suggest that many individuals are unaware of the scope of eligible expenses or are deterred by the perceived complexity of claiming the deduction. The law has been in effect for some time, with previous versions existing, and is referenced in other sections of the EStG, including those relating to joint tax assessments for married couples (§ 26a) and tax relief for business income (§ 35).
As of February 21, 2026, the German Finance Ministry has not released data on the number of taxpayers claiming the § 35a deduction for the 2024 tax year. A spokesperson for the ministry declined to comment on potential initiatives to increase awareness of the program.
