Why do pensioners get a 10% tax allowance against income in France?

The deduction forfaitaire de 10% ‘expenses’ allowance that is applied to retirees’ pension incomes has been in the news this year – but why does it exist and what difference would removing it make?

The 10% allowance does not have to be claimed and is applied automatically to reduce the amount of retirees’ declared pension income before the ‘family quotient parts’ system and income tax bands are applied. 

It thus also reduces the resulting income tax bill.

So that the wealthy do not benefit from unduly large amounts, the amount of the allowance is subject to a cap. 

In the case of retirees, for 2024 income declared in 2025 this was €4,399 per tax household (applied to all pensions of the household). 

There is also a per-pensioner minimum benefit, which was €450 (unless the declared income is less, in which case the deduction reduces the bill to zero).

As a money-saving measure, former prime minister François Bayrou proposed replacing this with a flat €2,000 allowance, which would have seen middle-income households with pension income between €20,000 and €43,990 pay more tax.

The allowance mirrors a similar one to help working-age people with their work-related expenses. 

It was introduced in 1978, during an economically difficult period, to reduce tax pressure on older people who, in many cases, had less income in retirement than in working life. 

Their pension income is, as a general rule, like salaries, assessed for income tax and social charges, though reduced social charge rates (down to zero in some cases) apply to small pensions. 

While the deduction figure is the same as for workers, the justification is different, linked to lowered income plus additional expenses related to advancing age, such as the fact that older people pay more for top-up health insurance than younger people.

Over the years, it has become an established part of the tax system, so simply removing it would be a burden on many less well-off pensioners, who would see their income tax rise suddenly from one year to the next, or in some cases would have tax to pay whereas previously their income fell below the payment threshold.