France’s 2026 budget focuses on cutting costs, with proposed changes to pensions, income tax bands and benefits, as well as reviews of property and wealth taxes, banking rules, charitable donations and parental leave.
2026 budget seeks to save money
Note that changes marked # are included in the ongoing negotiations for France's 2026 budget and may be subject to change
Many tax and other money changes were proposed by the government as part of the budget - largely aimed at money-saving - but these remained uncertain on publication.
If parliament is unable to agree on the budget before Christmas, there will be – as last year – an ‘emergency finance law’ to temporarily carry over 2025’s budget while attempts are made to pass a new budget early in 2026.
Among items raised in budget debates which looked unlikely to pass on going to press, but which could return later in 2026 in other forms, were reducing the time required for ownership of a second home before it is exempt from capital gains tax, increasing the inheritance tax allowance for stepchildren, and changing IFI property wealth tax to a more general tax on so-called ‘unproductive’ assets.
Note that some may be subject to change given the current political uncertainty in France, highlighted #.
# A freeze on income tax bands as well as on many benefits and on French state pensions is proposed.
If the freeze, also called an année blanche (blank year), goes through, people will pay more tax on 2025 income declared in 2026 than on 2024 income, if incomes have increased with inflation.
# Housing benefit, disability benefits, and pension payments would also not be uprated for inflation, it is proposed. From 2027, pensions would be under-indexed compared to inflation by 0.4 points a year.
Supplementary pensions paid by Agic/Arrco will also not increase in 2026, after unions and employers failed to agree on terms of an annual rise.
# 10% tax allowance for pensions to be replaced by a fixed €2,000, lowering tax for some low-income households and raising it for medium-income ones.
# The VAT threshold for most self-employed workers to be standardised at €37,500 (€25,000 for construction workers): rate would fall from €85,000 for commerce (buying and selling and chambres d’hôtes).
# End of collège (€61) / lycée (€153) / university (€183) tax reductions that help towards educational costs is proposed.
# End of preferential tax rates for E85 and B100 biofuels, probably raising prices.
# €2 tax on small parcels from outside the EU. This is in anticipation of EU plans to introduce a similar levy EU-wide.
# High-income surtax extended: minimum 20% effective income tax rate for high earners expected to continue for 2025 income declared in 2026.
# MPs voted to pause the 2023 reform that was set to raise the retirement age to 64. If kept in the budget, a freeze on increasing the age and length of paying in would last until January 1, 2028. The main groups affected: those born 1964-early 1965, plus slight easing for those born up to 1968.
# Non-EU foreign students to be excluded from housing benefit apart from those who have hardship grants.
# The government proposes pushing back the age at which families receive a higher monthly rate of allocations familiales for second and subsequent children from 14 to 18 years, to save money towards a new kind of parental leave (see below).
Each parent of a newborn can opt to take an additional congé de naissance birth leave of one to two months on top of statutory maternity or paternity pay.
The new allowance will not apply until July 1, however, parents of children born January 1 and May 31 may still be able to benefit from it retrospectively.
# Gifts to charities helping people in need to benefit from a 75% tax reduction within a limit of €2,000, doubled from €1,000 (after this, the reduction is limited to 66%).
Gift giving
Declarable gifts (donations) received in France must, from January 1, 2026, be declared not on paper forms but via your personal account at impots.gouv.fr. Click déclarer and then déclarer un don.
Communes
More than 200 additional communes were classified as zones tendues (facing housing shortages) in 2025, meaning they are eligible to impose a taxe d’habitation surtax on second homes in 2026 if they wish to (between 5% and 60%). This includes several near Dunkirk (Nord) and in the Alps.
Pensions
People who previously worked in the UK and want to top-up their pension entitlement from France have only until April 2026 to do so at the low Class 2 rate, if they have been eligible for this.
This applies to people who were working in the UK prior to moving and are still working in France. In a UK government money-saving measure, moving forward, it is only possible to top-up if you lived in or contributed in the UK for at least 10 years and only at the higher Class 3 rate.
Wealth tax
Proposals for a ‘Zucman tax’ – meaning that the very wealthy should pay at least a certain minimum percentage of their total wealth in tax every year – were rejected from the 2026 budget, but may return in some form in the course of 2026, eg. if presented as a proposed law by a group of MPs.
Banking
From November new rules on bank overdrafts come into play, aligning them more with other forms of consumer credit. Overdrafts are likely to be given in a less ‘automatic’ manner, with more checks made on customers’ ability to repay.
Improvements are being made to contactless payment technology, enabling the card to be further away from the machine and with more stable networks leading to fewer failed payments. It could also see the method become more widespread.
More people will be able to take out cash directly from shops such as bakeries, florists, grocers etc in 2026, as a ‘private cash points’ (points d’accès privatifs aux espèces) system introduced in 2019 starts to open up. Previously, only people who banked with the same bank as the shop could access cash in this way.
It comes as a rollout of more shared cash machines for customers of BNP Paribas, Crédit Mutuel, CIC and Société Générale is expected to continue this year.
More branches of BNP Paribas and its subsidiary Postbank are expected to close in 2026 as the bank makes cuts linked to fewer people visiting physical branches.
Money
A design competition for new Euro banknotes will open up for public votes before the winning designs – to launch in 2028 – are chosen. Two themes are proposed – one based on cultural and scientific figures such as Maria Callas, Beethoven and Marie Curie, and one on rivers and birds.
Tax credits
People who claim tax credits for employing (nannies, gardeners etc) will have to provide more information on their employee and the services rendered this year in their declaration of 2025 income.
Notaire fees
More French departments are expected to announce they are raising ‘notaire fees’ on property purchases from 4.5% to 5%, as permitted in 2025 budget rules (see this previous article).
