The income tax (IR) reform, the mainstay of the 2025 finance bill (PLF), provides for a series of measures aimed at reducing the tax pressure on taxpayers, in particular the middle and lower classes. income, with the aim of improving purchasing power and stimulating formal employment.
This reform, which promises to offer a real breath of fresh air to civil servants, employees and retirees, arises mainly from the recommendations of the National Tax Conference of May 2019 and is a continuation of the historic agreement of April 2024 on social dialogue.
It reflects the Executive’s commitment to an increase in income and greater tax fairness, with tax reductions of up to 50% for certain brackets.
Concretely, said reform would allow civil servants to benefit from an increase of up to 480 dirhams, while extending the exemption from IR to more than 80% of employees in the private sector and nearly 96% of retirees.
In the opinion of Ibrahim Rais El Fenni, chartered accountant and auditor, the IR reform aims to gradually reduce the tax pressure on taxpayers in parallel with the broadening of the tax base.
This approach aims to support the purchasing power of households while maintaining state revenue through a broader distribution of the tax base, explained Mr. El Fenni in an interview with MAP, specifying that these adjustments make it possible to reduce the tax burden on low- and middle-income households.
“An employee with a net taxable income of 5,000 dirhams per month will benefit from a reduction in their monthly tax, going from 333.33 dirhams to 166.67 dirhams, which represents a saving of 166.66 dirhams. For taxpayers whose monthly net taxable income is between 8,333 and 15,000 dirhams, the tax reduction could reach up to 400 dirhams,” said the accountant.
IR reform: key measures planned for 2025
As part of the PLF 2025, ambitious measures are put forward to reform the IR in depth and reduce the tax burden.
Indeed, Mr. El Fenni indicated that this concerns in particular the raising of the exemption threshold from 30,000 to 40,000 dirhams annually, which represents a total exemption for monthly incomes below 6,000 dirhams, estimating that this measure would protect low-income households by sparing them from IR.
It is also envisaged to increase the reduction for dependents, with a reduction amount for dependents increased from 360 to 500 dirhams per person, with a ceiling increased from 2,160 to 3,000 dirhams for a maximum of six people, a- he argued, adding that the reform provides for a revision of the brackets of the IR scale, adjusted to reduce the tax burden on average incomes.
And remember that the new brackets concern 0% for income up to 40,000 dirhams, 10% for income from 40,001 to 60,000 dirhams, 20% for the bracket from 60,001 to 80,000 dirhams, 30% for the bracket from 80,001 to 100,000 dirhams, 34% for income between 100,001 and 180,000 dirhams, and 37% for income above 180,000 dirhams, thus lowering the previous marginal rate of 38%.
What about the impact of the IR reform on businesses?
With increased purchasing power, employees are likely to consume more, which can boost demand for local goods and services, noted Mr. El Fenni, stressing that by reducing the tax burden on employees, the reform could contribute to a more peaceful social atmosphere in companies, thus reducing the costs associated with turnover and possible staff dissatisfaction.
Indeed, these measures should allow a notable improvement in purchasing power in the short term, with substantial tax reductions for incomes between 5,000 and 15,000 dirhams monthly, he noted.
Furthermore, the impact of this reform in the long term remains dependent on economic developments, in particular inflation, which could quickly reduce the benefits provided by these adjustments, noted the accountant, recommending planning periodic updating of these scales, taking into account economic fluctuations, to guarantee their effectiveness over time.
The IR reform will undoubtedly play a key role in reducing the tax burden on a large majority of taxpayers, allowing a strengthening of purchasing power. By promoting better tax justice, this reform also has significant potential to boost the national economy, stimulate internal consumption and strengthen social cohesion.
