54% of French households did not pay income tax in 2025
Income tax brought in a record €95 billion last year despite most homes not paying any
The more people living in a tax household, the higher their tax-free threshold
Prostock-studio/Shutterstock
More than half of French households did not pay any income tax in 2025, new data reveals.
However, more households paid tax that year than in 2024, and numbers paying were the highest in a decade.
Data from the DGFiP (French tax authorities) shows that 19 million households paid income tax in 2025. This equates to around 46% of households, higher than the 44% who paid income tax in 2024.
It led to a record €95 billion collected from income tax, around a quarter of the French state’s overall revenue and the largest single contributor alongside VAT.
Why do so many households not pay income tax?
The lack of ‘income tax’ can be a pleasant surprise for those who move to France and are not subject to it.
Figures can be misleading however, as it can give the impression that most people in France do not see any levies on income they receive.
This is not the case, as income tax is only one of several tax or tax-like elements impacting people, though this is variable depending on their situation and the types of income they have.
This includes social charges, levied on pay and some pensions but also on other kinds of income such as bank interest and share dividends.
Some of these pay towards people’s rights to benefits such as pensions, unemployment benefits and family allowance, while others fund the social security system in general. However, they are separate from ‘income tax’.
In addition, several other taxes such as VAT, property taxes (taxe foncière and taxe d’habitation), taxes on fuel and energy are all separate from income tax and are levied separately.
An individual therefore may pay several thousands of euros of tax per year, but still avoid income tax following their annual spring declaration.
Income tax is levied based on household income from a range of taxable sources (salary, dividends, rental income, etc). Declarations in spring provide information on income from the previous year.
France’s first income tax band – a 0% rate that makes these earnings free from income tax – applies up to a certain threshold.
This level usually changes annually in proportion to inflation, and for 2025 income declared in spring 2026 this 0% band applies to income up €11,600.
Most households still continue to be free of income tax despite income reaching several thousand euros above this first tax-free band.
This is due to several mechanisms.
Notably, households benefit from the ‘parts’ system, which enables larger families to have more of their income proportionally taxed under lower income tax bands, thus they pay less tax than single people or small families, on the same income.
A system called the décote is also applied to further lower income tax bills of low-income families. A ‘collection threshold’ also exists, meaning if income tax is less than €62 it is not collected.
For 2024 income declared in 2025, for example, although the 0% income tax band ended at €11,498, a single person would have had to have net taxable income of at least €17,438 to pay income tax.
Finally, a wide series of tax credits and reductions – seeing people reimbursed for a portion of varied costs including home help, home cleaners and gardeners, childcare, etc – can also see income tax levels reduced.
“In recent years, we have observed a very strong increase in tax credits for personal services, which can remove a number of households that are on the edge from paying income tax,” said head of the DGFiP Amélie Verdier quoted in Les Echos.
Certain reductions to final household income levels before income tax is calculated are available in some situations based on certain jobs (such as journalists, etc) or situations.
Why are more households paying income tax now?
Around the start of the last decade, just over half of households were paying the tax.
Several measures limiting income tax payments originated under Socialist President François Hollande, predecessor to Mr Macron, who sought to reduce tax burdens for French households, for example by abolishing a first income tax bracket, which started at 5.5%.
Mr Hollande’s tenure saw the number of households paying income tax drop from 19 million to around 16 million, or from 52% to 43% of people paying income tax.
Under President Macron in 2020, the first taxable band was lowered from 14% to 11%, however numbers paying have slowly continued to rise.
According to Ms Verdier, the system by which the tax bands are indexed on inflation plays a role.
This means in theory that households who see income increase only at the rate of inflation or below are unaffected and pay roughly the same amount of income tax as the year prior (in many cases, no tax).
However, “there can be wage dynamics that are somewhat faster than inflation,” Mrs Verdier said. “There are periods of acceleration that can be reflected in the rate of households subject to income tax.”
She said, notably, rapid inflation seen in the post-Covid years had in some cases seen wages only fully catch up in a sudden burst later on, which was one reason for 900,000 extra households paying income tax last year.
