# German welfare tax and benefit reforms

> Live situation record from CLSTR: https://clstr.news/situations/german-welfare-tax-and-benefit-reforms
> Updated: 2026-07-31T04:58:16.000Z. Sources: 10. Developments: 2.

In early July, the German government clarified the tax treatment of Pflegegeld (care allowance) and announced future increases to the Entlastungsbetrag, signaling a review of existing social‑care benefits. By the end of the month, detailed guidance was released on a new tax relief for grandparents who look after their grandchildren during school holidays. The measure allows grandparents to deduct up to 80 % of childcare expenses, capped at €4,800 per child annually, and also reimburses travel costs based on documented mileage or public‑transport tickets. The 2026 guidance clarifies that deductions require a written invoice, contract or benefit notice and cannot be claimed for cash payments; travel reimbursements are limited to €0.30 per kilometre. An illustrative example notes that an aunt driving 160 trips of 30 km could claim €1,440 in travel costs, yielding a €1,152 tax deduction. Together, these steps illustrate a broader effort to expand tax‑friendly support for family and care responsibilities in Germany.

## Claims

- Childcare costs for children up to age 14 can be claimed as special expenses up to 80 % of the cost, with a maximum of €4,800 per child per year. (corroborated by 3 sources)
- A claim requires an invoice, contribution notice or written contract and payment must not be made in cash. (corroborated by 3 sources)
- Travel reimbursement to grandparents is deductible if documented, at up to €0.30 per kilometre for car trips or actual ticket costs. (corroborated by 3 sources)
- An example calculation shows 160 trips of 15 km each (30 km round trip) at €0.30 per kilometre yields €1,440 travel‑cost reimbursement. (corroborated by 3 sources)

## Timeline

### 2026-07-31: German tax rules let grandparents deduct childcare costs

German grandparents can deduct 80 % of childcare costs (up to €4,800 per child) and travel expenses, provided they have proper documentation, says BVL chief Jana Bauer.

10 sources. https://clstr.news/cluster/german-tax-relief-for-grandparents-caring-for-grandchildren-during-holidays

### 2026-07-04: Germany Clarifies Tax Status and Future Increases of Pflegegeld and Entlastungsbetrag

Germany confirms Pflegegeld is tax‑free for recipients and close caregivers, while the Entlastungsbetrag will rise in Jan 2028 based on core inflation.

4 sources. https://clstr.news/cluster/germanys-pflegegeld-to-stay-unchanged-until-2028-with-clarified-usage-rules

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Cite as: German welfare tax and benefit reforms. CLSTR, https://clstr.news/situations/german-welfare-tax-and-benefit-reforms