The first decisions have been made regarding the tax increase planned for 2025.
After whole days of various and varying hypotheses, the project to increase taxes from 1er January 2025 is getting closer. The new Prime Minister, Michel Barnier, and his government have decided on several subjects, notably on the flammable issue of income tax. While households were worried about having to pay more to the State, the tenant of Matignon wanted to reassure by affirming that the most modest and the middle class would not have a cent more to pay.
However, there was talk of a partial increase, particularly for French people with comfortable incomes and in the highest tax brackets. The services of the Ministry of the Economy have studied the question, trying to quantify what such a decision could bring into the country’s coffers. Michel Barnier ended up deciding the subject and should make the news official shortly, during his general policy speech delivered this Tuesday 1er October 2024, i.e. when its Budget Minister, Laurent Saint-Martin, will table the 2025 draft budget, around October 9.
According to the elements consulted by The Worldfreezing the revaluation of the income tax scale was considered. But the idea was abandoned. The scale will increase at the same level as inflation in order to prevent many households from paying more taxes and others from becoming taxable. In spring 2025, income tax levels will therefore remain the same as in 2024. Relief is therefore expected for households, even if this information remains to be officially confirmed.
As for tax increases, these should weigh on large groups with the implementation of an exceptional surcharge, only in 2025, but also a tax on the buyback of shares, an increase in the automobile ecotax and the end of a tax advantage on short-term property rental.
Latest updates
17:28 – Corporate tax could rise from 25 to 33.5%
In his desire to increase state revenue through an increase in taxes, Michel Barnier declared that he wanted to take more money from “those who can contribute to this effort”. Understand: the rich and big businesses. Still according to information from Worldthe latter should indeed put their hands in their pockets a little more. The government plans to increase corporate income tax from 25 to 33.5% for groups with a turnover of more than 1 billion euros and which are liable for corporate tax. . Expected gain: 8 billion euros in 2025.
17:10 – No increase in income tax
This was the point that most crystallized political tensions: the possible increase in income tax. More precisely, the freezing of the scale which would have mechanically led to higher bills for households and which would have made low-income households taxable. Inconceivable for many elected officials. Finally, after a detailed study of the subject by the Ministry of the Economy, this will not be the case. The World affirms that the income tax scale will increase at the same rate as inflation, as it does every year, so as not to penalize households. Michel Barnier or Laurent Saint-Martin, his Budget Minister, should formalize this shortly.
13:22 – Will MPs vote in favor of raising taxes?
This is the whole question since the result of the legislative elections. Split into three large blocs, the National Assembly is more divided than ever. So, what about the 2025 budget? Not having the support of 289 deputies (absolute majority), the government risks coming up against opposition from the NFP and the RN. However, he has a weapon to pass the budget in force: the famous article 49.3 of the Constitution. If this is used, a motion of censure may then be passed. If it is adopted (289 votes minimum), the government is overthrown and everything starts from scratch. If it is not adopted, the text then enters into force because this means that a majority of deputies did not oppose the government. What will the scenario be? The fog is still thick: will the NFP and the RN join forces? This is the whole question for the weeks to come.
12:20 – What are the most serious avenues for increasing taxes?
As the formalization of the future tax increase arrives, certain avenues are becoming more and more clear. According to The Worldan exceptional tax on the profits of large groups should be submitted to the vote of deputies, as well as a tax on the buyback of shares, a higher tax on the purchases of polluting cars, as well as the end of a tax advantage on short-term rentals such as AirBnb. On the income tax side, nothing should ultimately change.
11:43 – Here’s when the future tax increase will be revealed
Minister responsible for the Budget, Laurent Saint-Martin officially indicated when the precise terms of the tax increase would be revealed: it will be Wednesday October 9. That day, the minister will present the draft budget for 2025, before it is debated in the National Assembly, then in the Senate. The broad outlines will also be revealed during Michel Barnier’s general policy speech on Tuesday, October 1.
11:23 – An impossible return from the ISF?
The idea has been rumored, notably by the left: which promotes the measure: the reestablishment of the solidarity tax on wealth (ISF). Abolished by Emmanuel Macron in 2017, it concerned 358,198 households and had brought in, last year, a little more than 5 billion euros into the coffers of the Public Treasury. The replacement system – the real estate wealth tax (IFI) – turns out to be a much smaller tax windfall: “only” 175,980 households have to pay it, for a total revenue of 1.9 billion euros in 2023 3 billion less income: not a straw, when we know that we have to find 20 per year from now on. However, Michel Barnier has never spoken publicly about such a project, which would reverse a flagship measure of the first five-year term and The Tribune affirms that the return of the ISF is not on the agenda.
10:59 – Are we going to pay more income tax? It’s possible
Until recently, the track was completely excluded: be careful of the possible reversal of the situation. Each year, the brackets of the income tax scale increase at the rate of inflation, so that the amount of taxes does not increase if income evolves at the same rate as inflation, so as not to penalize households. However, Michel Barnier would consider freezing the evolution of the scale for 2025, probably on the highest brackets, those imposed at 41 and 45%. These would therefore be households declaring at least 6,860 euros per month to the tax authorities.
10:21 – Macronists oppose the tax increase
27 deputies and former ministers of Emmanuel Macron, affiliated with the presidential group Ensemble pour la République (EPR) oppose, in a text published by The Tribuneto any increase in taxes, while Prime Minister Michel Barnier plans to make those who can contribute more, “in an exceptional and temporary manner”. “It seems to us […] unthinkable that after seven years of tax cuts, it is the alliance of the central bloc which ends up giving up fiscal stability to increase them”, write Mathieu Lefèvre, Charles Rodwell, Aurore Bergé, Marie Lebec and Sylvain Maillard.