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The year 2025 begins on an uncertain note for taxpayers. A delay in the adoption of the Finance Law will have direct impact on tax collection. Some taxpayers risk seeing their contributions increase at the start of the year.
But then, what are the reasons for this change? And how are you preparing for this new situation? We explain everything to you, in detail!
Withdrawal at source under pressure
The withholding tax makes tax management easier for many French people. However, with the current political context, the measure has reached an impasse at the start of the year. The 2025 Finance Law, which was to introduce significant changes, remains suspended due to the failure of the vote on its project.
Therefore, the government decided to keep the system in placebut on a temporary basis. This means that the withholding tax will continue to apply according to the 2024 rules, at least for the start of the year.
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However, this is not without consequences for certain taxpayers. In the absence of readjustment of the tax scale, the tax rates may not be up to date. Some French people could then find themselves with withdrawals higher than expected.
An indexation of the scale pending
The income tax scale remains awaiting an official adoption. The government planned to put it in place from January 1, 2025, but with the delay in the finance law, this schedule has been disrupted.
François Bayrou, the new Prime Ministerannounced that a new draft budget would be presented in February. Therefore, indexing will be delayed until spring.
Indexing the scale would have made it possible to maintain taxation at a level similar to that of the previous year. However, in the absence of this measure, certain taxpayers risk see their withdrawals increase from the start of the year. This situation raises concerns among those who expected fiscal stability.
An increase in this withholding tax
The big change linked to withholding tax concerns the rates applied. The tax administration clarified that no review will take place in Januaryas is usually the case every year.
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In practice, 2024 levy rates will remain in effect. On the other hand, for those who saw their income increase in 2024, this situation could lead to a larger levy.
Taxpayers who have opted for neutral rate (or non-personalized rate) will not be impacted by this delay. As a reminder, this option allows you not to disclose all employees' resources to their employer. So, for these taxpayers, they will continue to pay according to the rates applied in 2024, without surprise.
On the other hand, those who chose a personalized rate, based on their actual incomecould see their increases taken at the start of the year.
The tax administration therefore clarified that as long as the Finance law for 2025 does not see the light of day, the rates applied will remain unchanged. Taxpayers will have to wait for the scale to be updated, scheduled for the coming months, to see a possible downward adjustment.
