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France plans higher tax bracket thresholds to account for inflation

The rise is to take into account the fact that many people got wage rises this year to manage the cost of living crisis, which could have pushed them up a tax bracket

It is standard for the government to adjust income tax bracket thresholds each year to take into account inflation Pic: Chayanuphol / Shutterstock

France intends to increase its income tax brackets in 2023, raising each threshold by 5.4% to account for inflation. 

The move was announced by finance minister Bruno Le Maire on Monday (September 26) during the announcement of next year’s budget. 

Read more: Healthcare, climate, cigarettes: France announces its 2023 budget

It means that a single person with no children – who in tax terms counts as one unit (or une part) – will begin paying 11% tax on their income from €10,778 per year. This is up from €10,226 this year. 

Similarly, income tax will be applied at a 30% rate for people earning €27,479-€78,570, as opposed to €26,071-€74,545 previously.

The budget must still be adopted by parliament but if it is then the new income tax brackets will apply for tax declarations that are filed in spring 2023 on income earned in 2022. 

The table below shows how the new tax brackets will look and what rates will apply from 2023 if the budget is approved. 

By way of comparison, the table below shows the current tax brackets and rates that are currently in application. 

Why are the tax bracket thresholds increasing?

The aim of increasing the tax bracket thresholds is to stop people who have had their salaries increased to cope with inflation ending up in a higher bracket and therefore having to pay more tax. 

This is notably the case for people earning minimum wage, which has been increased four times in the past year to take into account inflation. 

France’s minister for public accounts Gabriel Attal told CNews last week that without increasing the thresholds, a single person earning minimum wage would end up having to pay income tax of around €130. Normally, people earning minimum wage are not taxed on their income. 

Increasing the thresholds may also mean less tax for those whose salaries have not been increased. 

"A single person who earns €2,500 [per month], whose salary has not increased, will pay €328 less in tax over the year,” Mr Attal said. 

It is normal in France for the government to adjust income tax bracket thresholds for inflation. This has happened regularly since 1969, with the exception of 2012 and 2013 when the scale was frozen for budgetary reasons. 

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