If you’re raising little ones in Germany, you’ve probably already heard of the childcare tax deduction. This means that a portion of what you spend on childcare can be deducted from your taxes each year.
But how exactly does the childcare deduction work, and how can you make sure you get the most out of it when it comes time to file your taxes? Read our guide to get a general idea. Always remember to consult with your own licensed German tax advisor for information that’s tailored to your family’s tax situation.
What is the childcare tax deduction and how does it work?
Since 2025, the childcare tax deduction works like this:
- You can deduct 80% of your childcare costs up to €6000 per child, per year
- Up to a maximum of €4,800 per child, per year
This means if you claim €6000 of childcare expenses, you’ll receive the full deduction of 80% of that €6000: €4800. This is the cap, however. If you claim €7000 or €8000, you’ll still only receive €4800 as a deduction.
This reduces your taxable income, not your tax bill directly. The exact savings depend on your personal tax rate. The deduction can be applied whether you employ your nanny via an employment contract, or whether she is a freelancer writing invoices. The important thing is that you have a contract and a record of payments made.
Is all childcare eligible for the childcare tax deduction?
Not exactly. You can claim the following kinds of childcare as part of the childcare tax deduction:
- Nannies
- Babysitters
- Kita
- After-school care
These must be genuine care and supervision services, not education-focused services. This distinction is defined in official tax guidance.
Things like tutoring lessons or extracurricular activities (e.g. music, sports) wouldn’t qualify for the childcare tax deduction. Nor would care-related food, travel, or accommodation costs.
What are the requirements for the childcare tax deduction?
To claim childcare costs, you must meet a few key conditions:
- Your child is under 14 years old
- They live in your household
- You have a formal contract or invoices
- Payments are made by bank transfer (no cash)
Whether you’re working with a freelance nanny or via employment contract, you’ll qualify for the childcare tax deduction as long as you have a written record of services and payment provided.
What is the household services tax credit?
There’s another tax-saving option that many families choose to use, alongside the childcare tax deduction. This is called the household services tax credit (§35a EStG.) Unlike the childcare deduction, this is applicable for general household services, which could include cooking, cleaning, gardening, or other household help.
With the household services credit, you can claim 20% of eligible costs, up to €4000 per year. If you employ someone via minijob, this limit is capped at €510 per year (FamilienPortal.de).
Can I apply both the childcare tax deduction and the household services tax credit together?
In some cases, it is possible to apply both the household services tax credit and the childcare tax deduction, but you’ll have to watch out for a few things.
Most importantly, you cannot apply two deductions to the same costs, so you’ll have to make it clear how you’re dividing the costs. If the nanny performs both childcare and childcare-related household tasks (for example children’s meals, children’s laundry, or tidying children’s rooms), then you could separate her earnings as follows:
Here’s an example of how that would work.
Let’s say a family with one child hires a nanny for 12 months, with a salary of €3000 per month.
Monthly nanny salary: €3,000
Annual cost: €36,000
1. Separate the costs
- Childcare (80%): €28,800
- Household services (20%): €7,200
2. Apply the childcare tax deduction (80% deductible with a max of €4,800 per child)
- €28,800 × 80% = €23,040 → capped at €4,800
- Deduction applied: €4,800
- This amount reduces your taxable income
3. Apply the household services credit (20% tax credit, max €4,000/year)
- €7,200 × 20% = €1,440
- Tax credit: €1,440
- This amount directly reduces your taxes owed
It’s key to remember that the childcare deduction isn’t directly applied to your taxes owed, the way that the household services tax credit is. So even if you reach the full deduction of €4,800 (or more, if you have more kids), the direct savings to your taxes will be less.
Going back to our example, the family’s final tax savings might look like this, depending on their tax rate:
| The Family’s Tax Rate | Savings from Childcare Deduction | Household Services Tax Credit | Total Savings |
| 30% | €1,440 | €1,440 | €2,880 |
| 42% | €2,016 | €1,440 | €3,456 |
Are Lighthouse Nanny’s services tax deductible?
Like any professional nanny services, Lighthouse Nanny’s services are all arranged with contracts and clear records of payment: payroll for employees, and invoices for freelancers. This means all your nanny costs are eligible for the chidlcare tax deduction.
In the case of employed nannies, you can often apply the household services tax credit as well, at least in part. However, this will depend on how the nanny’s contract is structured. The household services tax credit is not always applicable for freelancers.
