for income tax, what will the 2025 finance bill (PLF) change?

ECONOMY – Good news for taxpayers. By presenting the finance bill for 2025 this Thursday, October 10, the Ministry of the Economy confirmed the government’s intention to index the income tax scale to inflation. While the idea of ​​freezing this scale had been mentioned previously, which would have weighed heavily on the purchasing power of the French, this announcement is a serious boost for taxpayers’ wallets.

By indexing the income tax scale, the executive wants “neutralize the effects of inflation on the level of household taxation”. In doing so, the French will keep “an identical level of taxation with stable income”, he specifies in the PLF.

Concretely, this means that the tax bracket thresholds will be increased next year depending on the increase in prices observed in 2024. Such a mechanism had already been applied in previous years, with an increase in thresholds of 4.8%. in 2023 and 5.4% in 2022. This time, Bercy plans an increase of 2%.

The consequences of this revalued scale

French people whose income in 2024 remained the same as that of 2023 will thus see a slight reduction in their tax next year. Those whose remuneration has been adjusted to keep up with inflation will not experience a significant increase, their tax level will remain close to that of the previous year. On the other hand, employees who have received an increase in their income above inflation will have to pay more taxes, but the impact will be reduced thanks to the adjustment of the scales.

As you can observe in detail below, if these new scales proposed by Bercy are validated during the examination in Parliament, it will be necessary to achieve a tax share (the net taxable income divided by the number of shares) greater than 11,520 euros to be taxable in 2025, compared to 11,294 euros in 2024. According to the ministry, this should help prevent nearly 530,000 households from falling within the scope of income tax.

Income tax scale for 2025, according to the finance bill:

• 0% tax rate for a tax share of up to 11,520 euros (compared to 11,294 euros in 2024).
• 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 and 83,988 euros (compared to 82,341 euros).
• 41% tax rate for the portion of income between 83,988 and 180,648 euros (compared to 177,106 euros)
• 45% for the share of income above 180,648 euros (compared to 177,106 euros)

It remains to be noted that this scale was indexed to inflation at 2%, an estimate communicated to Bercy several weeks ago by INSEE. However, in a new economic report published this Thursday, INSEE estimated that inflation will rise to 1.8% over the year 2024. The scale described above could therefore be readjusted in the future when of the examination in Parliament, and drop slightly to align with 1.8% instead of 2%.

Also see on HuffPost :