Income tax bands for 2023 income will – as is usually the case – again be indexed to inflation to cushion the effects of price rises on taxpayers, the government has said.
This refers to increases in the start points of each rising band and not the percentage rates applied to income within the bands, which change much less frequently.
The government is not legally obliged to raise the bands – they are set each year in the budget bill – but not to do so would be unpopular. A ‘freeze’ was last seen in 2012 when the bands applied to 2011 income were the same as those applied the previous year to income from 2010.
The government, which is preparing the loi des Finances pour 2024 (2024 budget bill), plans to raise the bands by 4.8% according to Economy Minister Bruno Le Maire. This would be similar to official statistics body Insee predictions of a roughly 5% inflation rate over the course of 2023.
Mr Le Maire told French media LCI: "No employee will pay more tax and some will even pay less."
The increase will mean that if your income did not rise at all in 2023, you should pay less tax than you paid on 2022 income. If you had a moderate raise in line with inflation, you can expect to pay about the same.
It should also mean that people on low incomes who do not have any tax to pay after application of the bands, should find that this applies again this time if their incomes have only, at most, risen to compensate for cost-of-living rises.
This relates to how much tax you ultimately pay overall on 2023 income once you have declared the income in spring 2024 and any final payments or refunds have been made. This takes into account any amounts of tax you may already have paid ‘at source’ or in provisional instalments during the course of 2023.
It is expected, as usual, that the government will base its band rises on the consumer price index, the main inflation indicator. This looks at the increases in the cost of typical household products, minus tobacco.
If the rise is fixed at 4.8%, then this will be slightly less than the 5.4% adjustment that was applied to the bands for 2022 income but will be significantly higher than the more typical rises of 1-2% seen over the previous decade when inflation was not as high.
The projet de loi des finances (budget bill) is expected to be presented to the Conseil des ministres (cabinet) on September 27, the first stage in consideration of a government bill.
Assuming a rise in the bands of 4.8%, next the bands for 2023 income will be:
- 0% to €11,294
- 11% to €28,797
- 30% to €82,341
- 41% to €177,106
- And then 45%