French Income Tax Guide 2025/26 — Impôt sur le Revenu & Cotisations Sociales

France's progressive income tax (Impôt sur le Revenu) combines with mandatory social contributions to create an effective marginal rate often exceeding 45% for top earners. Strategic use of deductions, reductions d'impôts (tax credits), and pension planning can significantly reduce tax burden.

Impôt sur le Revenu (Income Tax) Brackets 2025/26

France applies a quotient familial system—income is divided by number of family members (progressive splitting).

Plus: contribution exceptionnelle sur les hauts revenus (CEHR). It is not a flat 4%. For a single filer: 3% on the fraction of reference income between €250,000 and €500,000, then 4% above €500,000. For a couple: 3% between €500,000 and €1,000,000, then 4% above.

Social Contributions

Salariés (employees) pay significant social security deductions:

Net result: €100k gross ≈ €71k net after social contributions alone.

Pension & Retirement

Régime Général (Public Pension)

• Contribution: 8.95% employee + 13% employer
• Retirement age: 64, under the reform of 14 April 2023 (not 2024), phased in and applying in full to those born from 1 January 1969
• Replacement rate: the 50% coefficient applies to the average of the 25 best years, capped at the PASS, after 172 quarters (43 years) — the base pension alone therefore replaces well under 50% of a salary above the ceiling

Private Pensions & Reductions d'Impôts

Correction, 1 August 2026 — every private pension product named here is closed to new subscriptions. The PERP, the contrat Madelin, the Article 83 plan and the PERCO have not been marketed since 1 October 2020 (loi PACTE). Existing holders keep their contracts, but you cannot open one. The only individual retirement product you can subscribe to today is the PER (Plan d'Épargne Retraite).

The €8,114/year deduction ceiling attributed to the PERP was also wrong and long out of date. The retirement-savings ceiling is 10% of your previous year's professional income, capped at 10% of eight times the PASS. For contributions made in 2026 (computed on 2025 income) that is a maximum of €37,680 and a minimum of €4,710, the minimum applying even with no professional income. Your personal figure is printed on your tax notice under "Plafond épargne retraite".

• PER individuel: the current product. Voluntary contributions deductible within the ceiling above
• PER d'entreprise collectif / obligatoire: employer schemes that replaced PERCO and Article 83

Tax reduction: contributions reduce taxable income at your marginal rate — and the corresponding capital is taxed again on the way out. The PER defers tax; it does not cancel it.

Deductions & Tax Reductions

Défiscalisation (Standard Deductions)

• Frais réels (actual professional expenses): Replaces 10% standard deduction (good for high earners)
• Pension contributions: Capped deductions
• Mortgage interest: NOT deductible (unlike UK/US)
• Donations: 66% reduction @ taxable rate (up to 20% income)

Réductions d'Impôts (Tax Credits)

• Crédit d'impôt pour emploi (home care employee): Up to 50% of salary
• Children: France gives no flat "child credit". Children are accounted for through the quotient familial (extra parts) and, for childcare of under-6s, through the crédit d'impôt pour frais de garde. The "€200+/year per child" line previously shown here matched no French measure
• Investissement locatif: the 21% reduction was the Pinel scheme, which ended on 31 December 2024. It is closed to new investments; only commitments entered into before that date keep the benefit to term
• Frais de scolarité: Credit for school fees (private schools)

Self-Employed & Freelancers (Travailleurs Indépendants)

Micro-entreprise vs. EIRL

Micro-entreprise (simplified):

• Turnover caps — the €176,200 figure shown here was wrong for services. The caps are revised every three years: €77,700 (services and liberal professions) and €188,700 (goods, accommodation, on-site catering) for 2023–2025, raised to €83,600 and €203,100 for 2026–2028. These are not the VAT franchise thresholds, which are separate and lower
• Social contributions: a single global rate on turnover, by activity — 12.3% (goods), 21.2% (BIC services), 23.2% (Cipav liberal professions from 1 January 2026), higher for other BNC
• Income tax: the flat abatement (71% / 50% / 34%) is applied, then the remainder goes into the progressive scale with your quotient familial. There is no "all-in 21%" rate
• Advantage: minimal paperwork

Entreprise individuelle (EI) (standard):

Correction, 1 August 2026 — the EIRL no longer exists. Creating one has been impossible since 15 February 2022 (loi n° 2022-172 of 14 February 2022). It was replaced by the single entrepreneur individuel (EI) status, in which separation of personal and business assets is automatic and requires no declaration. EIRLs created before that date continue to run.

• Profit = Turnover – Expenses
• Expenses: All ordinary & necessary business costs
• Taxes: Income tax + social (CSG/CRDS ~19.6% on profit)
• Registration: not with URSSAF directly. Since 1 January 2023 every business creation, change and cessation goes through the Guichet unique at formalites.entreprises.gouv.fr, operated by INPI. The Guichet unique then transmits your file to URSSAF, the DGFiP, INSEE and the relevant registry. (Liberal professions can still complete the formality through autoentrepreneur.urssaf.fr.) URSSAF remains the body that collects the contributions and that audits them — but it is no longer where you register

Quarterly Advances (Acomptes Provisionnels)

Estimated tax advances due:

• 15 February, 15 May, 15 August, 15 November
• Based on previous year's tax
• Adjusted in final return (20 May deadline for freelancers)

VAT (Taxe sur la Valeur Ajoutée)

• Standard rate: 20%
• Reduced rate: 5.5% (food, books, hotels)
• Super-reduced: 2.1% (medications, newspapers)
• VAT franchise (franchise en base) thresholds, 2026: you are outside VAT below €37,500 of turnover for services or €85,000 for goods, accommodation and on-premises catering. Tolerance thresholds are €41,250 and €93,500; cross the tolerance threshold mid-year and you become liable immediately, from that transaction, not from the following January
• The single €25,000 threshold voted in the 2025 finance law was abolished by law n° 2025-1044 of 3 November 2025 and the thresholds above were maintained
• Note these are different from the micro-entreprise turnover ceilings, which govern the flat-rate deduction regime rather than VAT

Capital Gains & Investment Tax

Plus-values Immobilières (Property Gains)

• Rate: a flat 19% income tax + 17.2% social levies = 36.2%, not "as low as 19%". Real estate gains are explicitly excluded from the 2026 social-levy increase (CSG stays at 9.2% for property income and gains, per LFSS 2026 art. 12), unlike securities gains. There is no short-term/long-term rate split; duration works through the abatement, not the rate
• Exemption: primary residence = no CGT
• Calculation: sale price – acquisition cost – eligible works and costs = taxable gain
• Abattement for holding period — the "8% per year after 5 years" stated here was wrong, and the two taxes run on different clocks:
  • Income tax: 6%/year from year 6 to 21, then 4% in year 22 → fully exempt after 22 years
  • Social levies: 1.65%/year from year 6 to 21, 1.60% in year 22, then 9%/year → fully exempt only after 30 years
• An additional surtax applies to taxable gains above €50,000

Plus-values Mobilières (Securities Gains)

Correction, 1 August 2026 — France does separate investment income, and has since 2018. This section said securities gains and dividends are taxed at your marginal rate. The default regime is the prélèvement forfaitaire unique (PFU, "flat tax") of 31.4% — 12.8% income tax plus 18.6% social levies (up from 17.2% before 1 January 2026) — regardless of your bracket. Taxation at the progressive scale is an option you may elect, and it then applies to all your investment income for the year; it is only worth taking at low marginal rates.

• Default: 31.4% PFU (12.8% IR + 18.6% prélèvements sociaux)
• Option: progressive scale, global for the year, irrevocable for that year
• Dividends: same 31.4% PFU by default. The 40% abatement on dividends applies only if you elect the progressive scale
• Losses: offset gains of the same category, carried forward 10 years

Quotient Familial (Family Tax Splitting)

France's greatest tax advantage:

• Taxable income ÷ (number of parts) = effective rate applied
• 1 part = single, 2 parts = married/PACS, +0.5 per child (up to 2), +1 per child (3+)

Example: Couple + 1 child (2.5 parts) earning €60k combined:

• Effective brackets applied to €60k ÷ 2.5 = €24k per part
• Major tax savings vs. individual filing

Year-End Planning Checklist

• Maximize PER contributions — the PERP is closed; your personal ceiling is on your tax notice
• Harvest tax losses before 31 December
• File donation receipts (66% reduction)
• Verify PACS/marriage status for quotient familial optimization
• Check children's status (ages matter for quotient—plan births strategically over years)
• If self-employed, true-up quarterly tax advance
• Claim all documented professional expenses (Frais réels)
• Review CSG social contribution on savings (optimizable via structuring)

Common Mistakes

❌ Using micro-entreprise for high-margin services — 21% all-in tax may exceed standard rate above €50k profit

❌ Not claiming frais réels — 10% standard deduction often less than actual costs for high earners

❌ Missing quotient familial optimization — Married status can save €5k–€15k/year vs. single filing

❌ Ignoring the PER deadline — 31 December; contributions must be made by then to count for the year

❌ Deferring property sale to "next year" — the abatement is 6%/year for income tax and only 1.65%/year for social levies between years 6 and 21; timing matters but far less than the 8% figure previously shown suggested

✅ Register donations with Bercy — Evidence needed for 66% reduction claim

✅ Keep all invoices 6 years — Standard retention for URSSAF audits

✅ Work with expert — French tax code uniquely complex; Conseil en Gestion de Patrimoine (wealth advisor) often justified for €100k+ income

Bottom Line

French tax planning requires attention to:

1. Employees: maximise PER contributions within your personal ceiling, verify quotient familial, claim donations
2. Self-employed: choose micro vs. entreprise individuelle au réel carefully (the EIRL no longer exists)
3. Investors: property reaches zero income tax only after 22 years, and zero social levies only after 30
4. Families: Quotient familial is powerful—consider tax impact of marriage/PACS

Use our French Income Tax Calculator to model your 2025/26 tax bill.

Consult a Conseil en Gestion de Patrimoine or Expert-Comptable (CPA equivalent) — French tax is notoriously intricate, and professional guidance (€400–€2,000/year) often yields €5,000+ savings for mid-to-high earners.