The government presented this Thursday, October 10, the Finance Bill for the year 2025. An austerity budget marked by 60 billion in savings or new taxes, mainly targeting the wealthiest.
The word is repeated over and over: “effort”. The government of Michel Barnier presented this Thursday, October 10, its Finance Bill for the year (PLF) 2025, with 60 billion in savings and taxes on the menu to breathe new life into public finances, stifled by a galloping debt and a deficit threatening to reach 7% in the absence of austerity measures.
“An effort as urgent as necessary to return to a sustainable budgetary trajectory, which preserves our financing conditions and ultimately allows us to stabilize and then reduce our debt,” explained the Minister of the Economy and Finance Antoine Armand, and Laurent Saint-Martin, the Minister Delegate in charge of the Budget.
An effort mainly focused two-thirds on a reduction in public spending, the rest, on new taxes, particularly targeting the wealthiest businesses and individuals. Pensions, new taxes, new aid… Here is what we must remember from this PLF, which parliamentarians will have to amend and vote on.
• A change in the pension revaluation schedule
The government will put its finger on the thorny issue of retirement pensions, the largest item of public expenditure. The revaluation of this pension will still be indexed to inflation, but the increase will now be out of sync, with a lag of six months.
“Retirement pensions will be well indexed to inflation but from July, following the exceptional revaluations that have occurred in recent years (notably a revaluation of more than 5% this year, while inflation should be around 2% )”, explains Bercy.
Exceptional savings and taxes: will you be affected?
Other social benefits will remain indexed in a synchronized manner “in order to protect the most vulnerable groups”.
• A new tax on the wealthiest, 65,000 households affected
An “exceptional contribution” will be requested from 65,000 tax households, those with the highest incomes, or 0.3% of taxpayers who currently pay income tax, according to the government.
Who will be affected? “This targeted mechanism will apply to taxpayers subject to the exceptional contribution on high incomes (CEHR), namely those whose reference income exceeds 250,000 euros for a single person and 500,000 euros for a couple.”
The objective is to establish a minimum tax rate of 20% of total income, filling the remaining percentages after accumulation of income tax and CEHR. This temporary system will be applied “for a period of three years, with a view to supporting the trajectory of recovery of public finances”.
• An exceptional contribution from very large companies
Wealthy individuals are not the only ones to be involved. Companies “whose turnover exceeds 1 billion euros”, or 400 groups, will have to pay an “exceptional supplement on their profit”. The government hopes to obtain 8 billion euros in revenue through this means in 2025, and 4 billion euros in 2026, or 12 billion over two years.
“To distribute the effort more equitably, the contribution provides for two levels of taxation, depending on turnover, and smoothing to contain threshold effects. The contribution corresponds to 20.6% of the tax on companies due for 2024 for companies whose turnover is greater than or equal to 1 billion euros and less than 3 billion euros and 41.2% for those which reach at least 3 billion euros business”, detailed the Minister Delegate for the Budget Laurent Saint-Martin.
• A new income tax scale
The income tax scale will be revised to take into account inflation and will “prevent nearly 530,000 households from entering the scope of income tax”. The freezing of the scale, very briefly studied, was ruled out.
According to a technical document obtained by Context, the 2025 tax scale on income for the year 2024 adjusted by the Ministry of the Economy and Finance could thus be broken down as follows:
- 0% tax rate for income up to 11,520 euros (compared to 11,294 euros)
- 11% tax rate for the portion of income between 11,520 and 29,373 euros (compared to 28,797 euros)
- 30% tax rate for the portion of income between 29,373 euros and 83,988 euros (compared to 82,341 euros)
- 41% tax rate for the portion of income between 83,988 euros and 180,648 euros (compared to 177,106 euros)
- 45% for the share of income above 180,648 euros
• Plane tickets: towards a substantial increase in the solidarity tax
Air travel will cost more. The government confirms a tightening of the solidarity tax on airline tickets (TSBA), including private jets. This measure, which is not present in the PLF, will be presented in an amendment, as confirmed by the executive.
The amount of this increase has not been specified but the TSBA could bring in an additional billion euros, i.e. a three-fold increase in the tax. Last week, the airline sector had stepped up to the plate upon the announcement of this potential increase.
• Army, Health: budgets preserved
The Prime Minister had assured him: two budgets were not going to be cut. On the one hand, the envelope dedicated to the Army and Defense:
“Michel Barnier announced that the military programming law would be applied,” Minister Sébastien Lecornu declared on France Inter this Thursday, specifying that the increasing budget set for 2025 reaches 50.5 billion euros.
Another stable envelope, Health. Matignon assures that the budgets dedicated to Health will not be cut, while the tranche dedicated to mental health should increase: an addition of 600 million euros, at the request of the government, during the phase of parliamentary debate.
• Support measures for farmers
The farmers’ crisis is not over. Shortly after the appointment of Michel Barnier and his government, the first federation of professionals, the FNSEA, requested strong commitments. In this PLF, the government intends to respond to the crisis by maintaining aid, extending others, and introducing new ones.
Thus, Bercy announces the perpetuation of the system to support the hiring of seasonal workers (600 million euros). “The ministry’s budget will also allow the financing of the common agricultural policy, by mobilizing 500 million to co-finance in particular the compensatory allowance for natural handicaps, agri-environmental and climatic measures and aid for organic conversion”.
The government notes that this aid is cumulative to the 9.4 billion euros expected from the European Union under the European Agricultural Guarantee Fund.
• Extension of the zero-interest loan for first-time buyers
Another measure not included in the bill, but which the government wishes to include during parliamentary debates: the extension of the zero-interest loan. This system, aimed at first-time buyers, could be extended to the entire French territory. So far, the zero interest loan was only granted to tense areas.
However, the precise terms of this extension remain unclear. In his speech, Laurent Saint-Martin, the Budget Minister, simply announced that the conditions “will be specified and debated” during the parliamentary debates. Will both the old and the new be affected? Houses and apartments? The modalities will have to be specified to Parliament.
• Towards the elimination of an “Airbnb” tax loophole
The government wishes to correct the “tax bias” in favor of the furnished rental regime, long term (one year minimum or 9 months for students), but also for short stays, such as Airbnb.
The executive believes that this tax advantage “contributes to tensions on the rental market” by encouraging owners to place their accommodation on platforms such as Airbnb, to the detriment of “bare” accommodation.
A change which could, however, be to the detriment of traditional furnished rentals, as professionals in the sector had warned.
• Sick leave, cost of medical consultations
In addition to the Finance Bill, the government also submitted its copy of the Social Security Financing Bill (PLFSS). There are several changes, including a change in the method of compensation for sick leave, from the 4th day. Thus, the State will cap its reimbursement from 1.8 to 1.4 SMIC. A gap that should be filled by complementary health insurance.
Another change approved, an increase in the consultation rate with the attending physician. “The increase in the consultation of treating doctors to 30 euros will be in accordance with the medical agreement negotiated between health insurance and health professionals,” indicates Bercy.
