The revaluation of the progressive income tax scale for 2025 has just been announced by the French government. This measure, which takes place in a tense economic context, aims to protect the purchasing power of taxpayers in the face of inflation. Let's take a closer look at the upcoming changes and their implications for household finances.
A tax adjustment in the face of inflation
The Minister of Economy and Finance, Antoine Armand, presented the Finance bill for 2025, which provides for a indexing of tax scale brackets to inflation. This decision comes as France faces a worrying public deficit, estimated at 6.1% of GDP for the current year and potentially 7% next year.
The stated objective is to reduce this deficit to 5% in 2025, thanks to a plan combining:
- A reduction in spending of 40 billion euros
- An increase in revenue of 20 billion euros
Despite these budgetary constraints, the government has chosen not to freeze the progressive income tax scale. This decision will avoid an automatic increase in the tax burden on households due to inflation.
The new tax scale for 2025
The indexation of the tax scale to inflation, estimated at 2% for 2024 according to INSEE, will result in an increase in tax brackets. Here is the new progressive scale which will apply to 2024 income, declared in 2025:
| 2024 revenue (per unit) | Tax rate |
|---|---|
| Up to €11,520 | 0% |
| From €11,520 to €29,373 | 11% |
| From €29,373 to €83,988 | 30% |
| From €83,988 to €180,648 | 41% |
| Beyond €180,648 | 45% |
This revaluation will prevent taxpayers whose income has simply followed inflation from suffering a tax increase or becoming taxable.
Impact on taxpayers and tax deductions
The revaluation of the tax scale will have positive repercussions on several aspects of taxation:
Standard deductions: The 10% deduction on salaries will increase to a minimum of €505 and a maximum of €14,455. For retirees, the reduction on pensions will reach a minimum of €451 per pensioner and a maximum of €4,407 per household.
Other tax advantages: The tax reduction, the reduction for elderly or disabled people with modest incomes, and the savings linked to family quotient increases will also be increased by 2%.
Deduction limits: Certain ceilings will be raised, such as that of alimony paid to an adult child (€6,807) or the costs of caring for an elderly person (€4,047).
For owners, it is essential to note that the government plans to increase the taxation of capital gains on non-professional furnished rentals. This measure is part of a desire to rebalance real estate taxation.
Effects on household taxation
The revaluation of the tax scale will have varied effects depending on the situation of taxpayers:
Tax reduction at constant income: Households whose tax situation has not changed in 2024 will benefit from a tax reduction. For example, a single person declaring €35,000 in taxable wages will see their tax increase from €2,736 to €2,602, a reduction of 4.9%.
Stability for income following inflation: Taxpayers who have benefited from an increase in income comparable to inflation (around 2%) will see their tax remain approximately the same.
Advantage for high incomes: Mechanically, the wealthiest households will be the main beneficiaries in absolute value of this revaluation. A smaller share of their income will be subject to their marginal tax rate.
It should be noted that the income of non-professional furnished rental companies could be impacted by the new tax measures, which could modify the calculation of their taxation.
Finally, the revaluation of the progressive income tax scale for 2025 appears to be a measure to protect the purchasing power of taxpayers in the face of inflation. Although the effects vary depending on individual situations, this decision should make it possible to avoid a general increase in the tax pressure on French households.
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