The difference between an employee’s gross salary and their net salary received after tax is generally a high amount. Even more so if we do not initially take into account the gross salary, but the super gross salary, that is to say the total amount paid by the employer for his employee before deduction of employer contributions.
But employees are not the only ones to experience a gap between their gross income and their net income. This difference is found even in retirement. Indeed, if retirees no longer pay old age or unemployment contributions, they remain subject to income tax but also to certain social contributions, the main of which is the CSG (generalized social contribution).
Unless it is exempt from tax, the pension that a retiree receives each month may therefore be subject to a double deduction by his fund: social security contributions on the one hand and income tax then, via withholding tax. The transfer paid to his bank account is therefore the retirement pension net of tax and social security contributions.
Cumulatively over one year, the amounts withdrawn can reach significant amounts when a retiree’s income is in the highest brackets of the income tax scale on the one hand and the CSG on the other. elsewhere. Regarding the latter, let us remember that there are different CSG rates depending on a retiree’s income. If pensioners with the lowest incomes are exempt, the others are subject to a rate which can be 3.8% (reduced rate), 6.6% (median rate) or 8.3% (normal rate) depending on the level of resources.
To simplify the simulations, let’s take the case of a retiree living alone whose gross pension amount is €1,800 per month, or €21,600 per year. To estimate the amount of tax that this retiree will have to pay, we must take into account last year’s scales since the draft Finance Law for 2025 could not be voted on. On the other hand, the CSG scale has been updated on January 1, 2025, with a 4.8% increase in the income brackets taken into account to set the applicable CSG rate.
In this income bracket, the CSG rate is 6.6%. To which must be added the CRDS at the rate of 0.5% and the Casa at the rate of 0.3%. Or 7.4% in total. Our retiree will therefore be subject to a deduction of €1,598.40 from the gross amount of his pension.
Now let’s calculate the income tax to be paid. To complicate the calculations, we must remember that part of the CSG is deductible from income: 4.2% in the case that interests us. Conclusion: the taxable income of our retiree will be: 21,600 minus (4.2% x 21,600) = €20,692.
The standard deduction of 10% will then be applied, and the standard reduction from which those over 65 benefit. Ultimately, the income tax scale will apply to an amount of €17,250. Which will give a tax of €78. To compare with €1,598 in social security contributions.
This simulation proves once again that tax in the strict sense of the term weighs less on French households than social security contributions and social charges. For employees, as for retirees…
