Income tax: the new bands in France for 2025 after revision

The thresholds for France’s 2025 income tax bands have been raised in line with inflation, the Budget Ministry has confirmed. This means that those whose 2024 salaries increased above inflation will pay more tax in real terms.

Increased taxes are widely anticipated in 2025 following the appointment of Michel Barnier as prime minister.

Mr Barnier described France’s public finance situation as “extremely serious” on September 28, and has spoken of the need to raise taxes, particularly on the wealthy.

However, on October 3, the Budget Ministry revealed that the thresholds for France’s 2025 income tax bands would be revised in line with year-on-year inflation as normal, and not used to increase income taxes.

Pensions and some salaries rise in line with inflation each year, which would mean that many people could slip into a higher tax band were these bands not adjusted for inflation.

The rate of year-on-year inflation in France is calculated using the annual change in the purchase price of a range of common consumer goods (excluding tobacco).

This index, the Indice des prix à la consommation harmonisé hors tabac (Harmonised Index of Consumer Prices excluding tobacco), puts year-on-year inflation at 1.9% for 2023 to 2024.

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The adjustment means that in 2025 the lowest tax band will start at €11,509 (on 2024 income) rather than €11,294 for 2024 income taxes (on 2023 income).

How tax bands work

Under France’s system income tax is levied on the total income of the household, including minors, rather than on individuals or spouses. 

The family (or household) is divided into a number of parts called parts familiales. 

The total number of parts depends on the family circumstances and number of dependent children. 

For example, a married couple’s income would be divided into two parts, with an additional half-part for each of the first two children and a whole part for the third and subsequent children. 

A single person living alone, on the other hand, is one part.

Tax bands are applied progressively to the household income after it is divided by the number of parts familiales (and after any deductions and reliefs have been applied).

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For example:

A single person with net taxable income of €35,000 in 2024, with no reductions or deductions will pay as follows in 2025:

• Up to €11,509: 0%.

• From €11,510 to €29,344: (€29,344 - €11,509) x 11% = €1,961.85

• From €29,345 to €35,000: (€35,000 - €29,344) x 30% = €1,696.80.

Their total tax will therefore be €3,658.65 in 2025.

Had the tax bands not been adjusted they would pay more tax:

• Up to €11,294: 0%.

• From €11,295 to €28,797: (€28,797 - €11,294) × 11% = €1,925.33

• From €28,798 to €35,000: (€35,000 - €28,797) x 30% = €1,860.90

Their total tax would therefore have been €3,786.23, or € 127.58 higher.

A couple that is married (or in a civil partnership) and has 2 children would be a 3-part household (1 part for each parent and 1 half-part for each child). If they have a net taxable income of €90,000, their 2025 taxes work out as follows:

Their family quotient is €90,000 : 3 = €30,000.

• Up to €11,509 : 0%.
  
• From €11,510 to €29,344 : (€29,344 - €11,510) × 11% = €17,834 × 11% = €1,961.74
• From € 29,345 to €30,000: (€30,000 - €29,345 ) x 30% = €656 × 30% = €196.80

This total is then multiplied by the three parts, giving a total of of €6,474 in 2025.

Had the tax bands not been adjusted they would have paid more tax:

• Up to €11,294: 0%.
• From €11,295 to €28,797: (€28,797 - €11,294) × 11% = €17,503 × 11% = €1,925.33
• From €28,798 to €30,000: (€30,000 - €28,797) x 30% = €1,203 × 30% = €360.90

This sum of this (€2,286.23) is multiplied by the three parts giving a total tax of €6,858.69, or €385 more than will they pay under the revised tax bands.