Proposal to end 10% tax allowance for retirees in France: Key points

Retirees in France may no longer receive a fixed 10% tax allowance under a proposal being considered by the French government that would save the state billions.

The Minister for Public Accounts, Amélie de Montchalin, said on April 19 that the government had not ruled out the measure as part of its efforts to find €40 billion in savings to reduce the public deficit, which reached 5.8% of GDP in 2024. 

“I personally believe that we cannot indefinitely rely on the working population to finance new social spending related to ageing,” she told Le Parisien. “Your age is not the only thing that should determine your contribution, but also the means at your disposal.”

Read also: Measures to increase tax on well-off retirees under consideration for 2026 French budget 
Read more: Wealthy retirees could be taxed more under French minister’s new proposal 

What is the current allowance? 

Currently, pensioners benefit from a 10% tax allowance on their retirement pensions, ie. an amount that is deducted from the taxable income that is taken into account to calculate the household’s tax. 

This also applies to disability pensions and to pensions alimentaires (support payments paid to needy people by their relatives or as a result of court rulings).

This allowance is applied to pension income automatically. In 2025’s declarations of 2024 income, it will be capped at £4,399 per household.

The 10% tax allowance was originally created in 1978, as means to “lighten the tax burden” among this group.

Note that a 10% allowance is also applied to the salaries of employees, unless they opt for the ‘real expenses’ option in their declaration and keep proof of these. 

Why is the government considering changing it?

The government is looking to address the national deficit and is finding ways to save money across many different sectors, including healthcare and pensions. According to a report by state auditors, the Cour des comptes, the 10% reduction in pensions cost the state €4.5 billion in 2023.

Economy Minister Eric Lombard has confirmed that the subject is “on the table” and the government is considering it. He said that when pensioners are “over 60”, they get a lot more from the state because “you receive a pension and you are more likely to be ill…And at the same time, you contribute much less in terms of compulsory contributions”.

Who supports the idea and who does not? 

In addition to government figures in favour of the idea, others supporting it include president of the pensions advisory council, le Conseil d'orientation des retraites, Gilbert Cette, who is considered close to Emmanuel Macron.

Similarly, the president of employers’ group Medef, Patrick Martin, has called it “unnatural" and “absurd” that “a pensioner would benefit from a tax exemption for professional expenses amounting to €4.5 billion per year”.

However many others are, unsurprisingly, against the idea.

Nine trade unions (including the major workers’ unions the CGT, FO and CFTC) issued a joint statement earlier this year against the proposal, saying that the government is “stigmatising pensioners” and penalising the lowest earners while “continuing to exempt the very rich from taxes and contributions”.

Retirement union Unsa-Retraités is also against it, saying that “the 10% reduction applied to pensioners’ taxes has nothing to do with the tax deduction for professional expenses” of working people. The measure would simply “increase the tax contribution of 8.4 million pensioners…and not all of them are wealthy”.

Rassemblement National spokesperson Thomas Ménagé said that the suggestion is a “very bad idea” and he is “deeply shocked”. “Before reaching into pensioners‘ pockets, let's make structural savings,” he said to France Inter and FranceInfo.

However, the general secretary of the CFDT, Marylise Léon, gave a more nuanced view. 

She told La Tribune Dimanche: “I agree with the idea that the effort must be shared among all those who can contribute, both those in work and those already retired. The question of the 10% allowance enjoyed by pensioners needs to be looked at.”

How would the measure affect pensioners?

Unsa-Retraités has calculated that the tax bill could increase for around 8.4 million pensioners (half of France's 16 million pensioners). The union adds that ‘some economists are talking about 500,000’ pensioners who would become taxable when they are not today.

For example, Unsa-retraités has estimated that a single pensioner with an income of £1,200 per month would still not pay any tax under the new system, while a pensioner receiving €1,542 would newly have to pay €272 in tax. 

Sylvain Denis, honorary president of the National Federation of Pensioners' Associations, told FranceInfo that the plan would affect “a whole section of pensioners who will be hit hard”. 

However, Mathieu Plane, economist and deputy director of the analysis and forecasting department at Sciences Po thinktank OFCE, told France 2 that the measure would be fairer than other proposed measures to save money on pensions, such as under-indexing them against inflation.

“The most modest, the lower middle class of pensioners, will not be affected, because these pensioners were already not paying taxes, so they did not benefit from this tax allowance,” he said. 

“On the other hand, pensioners at the top of the middle class, or those who are fairly well off, will be the main losers."