The bill provides for the indexation of the income tax scale to inflation. This scale is increased by 2% in order to neutralize the effects of inflation on the level of household taxation.
The 65,000 wealthiest households will be liable for a differential contribution on the highest incomes. The aim is to ensure that these households are taxed at a minimum average rate of 20%. This system will apply for three years to people subject to the exceptional contribution on high incomes (CEHR), namely those whose annual income exceeds 250,000 euros for a single person and 500,000 euros for a couple. It should bring in 2 billion euros in 2025.
In terms of energy and transport, several taxes are increased.
Reduced VAT on gas boilers is abolished. Basing on electricity (formerly domestic final consumption tax on electricity -TICFE) was reduced from 2022 to 2024 to lower electricity bills for households and businesses during the energy crisis linked to the war in Ukraine. This is what we called the price shield on electricity. The finance law for 2024 implemented the gradual exit from this tax shield and recorded its end on February 1, 2025 in order to reduce the excise on electricity to its pre-crisis level. The PLF “adapts these normal excise rates”. A 9% reduction in electricity bills is, however, guaranteed to households at the regulated sales rate. An order from the Minister of the Budget will specify the new base rates (ex-TICFE). The increase in excise duty on energy should generate 3 billion euros in tax revenue in 2025.
The ecotax (CO2 penalty and weight penalty known as mass penalty) on polluting vehicles is reinforced. The CO2 penalty will be lowered by 5g/CO2/km in 2025 then by 7g/CO2/km in 2026 and 2027. To target the highest emitting vehicles, its maximum rate will at the same time be increased by 10,000 euros per year until 2027. The threshold for triggering the mass penalty tax will also be lowered, from 2026, from 1,600 kg to 1,500 kg. In addition, from 2025, the benefit of the reduction currently enjoyed by all non-rechargeable hybrid vehicles will be limited to environmentally efficient vehicles only. These measures, which also aim company vehiclesare expected to bring in 300 million euros in tax revenue from 2026.
In terms of housing, the PLF presentation file specifies that the zero-rate loan will be extended throughout the country for first-time buyers to facilitate access to property. The bill tabled in Parliament must be amended to this effect by the government.
The taxation of furnished rentals is, Moreover, modified. Taxpayers covered by the non-professional furnished rental regime (LMNP) can deduct, under certain conditions, depreciation linked to their accommodation from their taxable rental income. Currently, this depreciation is not taken into account in the calculation of the capital gain in the event of resale. This tax niche, which helps to strengthen investments in short term rental type AirBnB and increase tensions on the rental market, is removed. From January 1, 2025, depreciation allowed as deduction for the calculation of taxable income will, in the event of resale, be reintegrated into the taxable capital gain base. This measure should bring in 200 million euros.
The government has also announced that it will table an amendment to increase the solidarity tax on plane tickets (TSBA) from 2025.
