Three key takeaways
1. Most family-related tax benefits are not automatic and must be claimed.
2. New for 2025-2026: up to €922.50 per child in shared custody arrangements.
3. Protecting your family through protection and health insurance may also help reduce your tax bill.
Raising children comes with significant costs, and Luxembourg’s tax system provides several tax advantages for families. However, these benefits must be claimed. New for tax years 2025 and 2026: parents sharing custody of a child may, under certain conditions, benefit from a tax allowance of up to €922.50 per child. At Foyer, we know that family comes first. Here is a clear and practical guide to the tax benefits you should not overlook when completing your tax return, and how to make sure you receive them.
Your children and your taxes
Having children in your household entitles you to the child tax relief, set at €922.50 per child per year. Depending on your situation, this takes the form of a tax credit deducted from your tax liability. This is the foundation of the tax advantages granted to families, alongside several specific deductions.
New for 2025-2026: the shared custody tax credit
This is the key measure to be aware of this year. A tax credit of up to €922.50 per child is granted, upon request, to a parent whose child is not part of their household due to a shared custody arrangement and who, in the event of shared family allowance payments, does not benefit from tax class 1a. This temporary measure applies only to the 2025 and 2026 tax years, and eligible non-residents may also benefit from it.
Good to know
The tax credit is gradually reduced when taxable income exceeds €67,400 and is no longer granted once income exceeds €76,600. It must be claimed through the tax return (Form 100) or the annual tax adjustment statement (Form 163). As it is not granted automatically, make sure to request it.
Childcare expenses
Do you use a crèche, childcare centre or approved childminder? These childcare costs can be deducted as extraordinary expenses for children under the age of 14 on 1 January of the tax year, upon presentation of supporting invoices. You may either declare your actual expenses or apply a flat-rate deduction capped at €450 per month, or €5,400 per year, without exceeding the amount actually spent.
A child who is not part of your household
In the event of separation or divorce, if you mainly support a child who does not live in your household, you may claim a tax allowance. Since the 2025 tax year, the maximum amount has increased to €5,424 per child per year (compared with €4,422 previously). It is granted upon request to only one parent and is not available where both parents share the same home with the child.
Single parent tax credit
If you are raising a child alone and belong to tax class 1a, you may claim the single parent tax credit (CIM). For the 2025 tax year, the tax credit amounts to €3,504 for adjusted taxable income below €60,000 and decreases progressively above that threshold. The CIM is reduced by 50% of child-related allowances received in excess of €2,712 per year. Another useful feature: if the CIM exceeds your tax liability, the difference is refunded to you.
Extraordinary expenses: the golden rule
Extraordinary expenses (childcare costs, unreimbursed medical expenses, etc.) cannot simply be ticked on a form. You must declare the relevant amounts and provide supporting documentation. Make it a habit to keep your invoices and receipts throughout the year.
Filing your tax return without missing anything
To ensure you do not miss any of these tax benefits, you can rely on our partner taxx.lu. The AutoScan feature pre-fills your information from your documents (which should always be checked), the guided process highlights deductions relevant to your family situation, and the Opti-Score tool provides recommendations for future optimisation. You can view an estimate in real time, although the final assessment is determined by the Luxembourg Inland Revenue (ACD). An expert review is included from the Plus package onwards.
Good to know
As a Foyer customer, you benefit from a 30% discount on taxx.lu.
Protecting those who matter most
Taking care of your family also means protecting them if life takes an unexpected turn. A protection insurance solution such as protect4life can provide financial security for your loved ones in difficult circumstances, while supplementary health insurance such as medicis can help reduce healthcare expenses for the household. From a tax perspective, certain insurance premiums are deductible within the common ceiling provided under Article 111 (€672 per household member, increased for a spouse and each child). This ceiling is expected to increase to €900 as part of the 2028 tax reform. For current tax returns, however, the applicable amount remains €672. To learn more, read our article “Insurance premiums that can be deducted from your tax return.”
Frequently Asked Questions
Can I deduct nursery or childcare costs?
Yes. Childcare expenses for children under 14 can be deducted as extraordinary expenses, provided you can produce the relevant invoices.
My child is in a shared custody arrangement. Am I entitled to any tax benefit?
Possibly. For tax years 2025 and 2026, a tax credit of up to €922.50 per child may be available, subject to certain conditions and upon request.
I am a single parent. What can I claim?
You may qualify for the single parent tax credit if you belong to tax class 1a and have a dependent child.
Are these benefits granted automatically?
No, and this is the most important point: most of these benefits must be specifically claimed in your tax return. If you forget, you may lose the benefit.
Your family comes first. Speak to your Foyer agent about adapting your protection and health cover to your needs. And when it comes to completing your tax return, taxx.lu is there to support you.
