Budget in France: Projet de loi de finances – PLF 2025

2025 Updates for Individual Taxpayers

Income Tax and Contributions

• The French income tax brackets (barème de l’impôt sur le revenu) in 2025 will increase by 1.8%, adjusted to inflation. This prevents an automatic tax increase for households. These tax brackets will apply to income earned in 2024. More details in French Income tax brackets and tax rates in 2025.
• Differential Contribution Tax on High Incomes (CDHR): This contribution will target the wealthiest individuals (annual taxable income exceeding €250,000 for a single person and €500,000 for a couple), whose income tax rate is below 20%. The measure has been limited to one year (instead of the originally planned three years). It is expected to generate €2 billion for the state.

Environmental and Transportation Measures

• Reinforcement of the Eco-tax on polluting vehicles: Increase in CO2 penalties and weight-based taxes on polluting vehicles to encourage ecological transition and to better account for the depreciation of used vehicles.
  • The “CO2 penalty” (malus CO2) will be gradually reinforced, reaching a tax rate starting at 103 g/CO2/km in 2027, with a maximum rate of €90,000.
  • The “weight penalty” (malus masse) will apply starting at 1,500 kg, and the discount for non-rechargeable vehicles will be revised.
  • The reduction in the penalty will be adjusted and will be more significant for newer vehicles.
  • A retroactive penalty will apply in 2026 for vehicles that were not subject to a penalty during their initial registration.
• Increase in the Solidarity Tax on Airline Tickets (TSBA): From 1st March 2025, economy-class flights to France or Europe will see this tax rise from €2.63 to €7.40.
• Reduced VAT rates on heating-related operations. The reduced rate of 5.5% is extended to renewable energy heating systems. Fossil fuel boilers are excluded from the reduced rates, except for the maintenance and repair of existing equipment.

Housing and Property Measures

• Reinstatement of the zero-interest loan (PTZ: Prêt à taux zéro) for new home purchases, extended nationwide until 2027.
• Increase in notary fees by 0.5%. However, the first-time buyers (primo-accédants), who would have been most vulnerable to an increase in frais de notaire, are exempt from this increase.
• Exemption from gift transfer duties (DMTG) for certain family donations until the end of 2026.
• Extension of the Loc’Avantages scheme until the end of 2027 to promote access to affordable housing.
• Modification of Taxation on Furnished Rentals: Eliminating a tax loophole that allowed non-professional landlords to deduct depreciation without affecting capital gains on resale. More details in 2025 Finance Bill: More Taxes planned for Rental Property Owners using LMNP.
• Continuation of the Housing Tax (Taxe d’habitation) on Secondary Residences. However, certain structures such as emergency shelters are exempted.

Additional Fiscal Measures

• Tax exemption for Tips (pourboires): The tips paid by clients for a service are exempt from social security contributions and income tax since 2022. This exemption is extended to 2025.
• The monetization of working time reduction (RTT) days has been extended until the end of 2026.
• The continuation of the Coluche scheme which allows a 75% tax reduction for donations to organizations that assist people in difficulty, up to €1,000, and the tax reduction for donations made to organizations fighting domestic violence.
• A new Tax on unproductive wealth (for high-net-worth assets), which was aimed in particular at taxing the unrealized latent capital gains of cryptos (and other assets deemed unproductive) has been cancelled.