France's 2027 budget introduces tax reforms, pension adjustments, and new benefits, impacting retirees, high earners, and families with young children.
Tax adjustments for 2027
The 2027 budget proposal includes several tax adjustments, including inflation indexation of the progressive income tax scale at a rate of 2.1%, aligning with the inflation observed in 2026. This revaluation means individuals whose incomes have increased in line with inflation will not face a tax increase, while those with frozen salaries may see a slight decrease in their 2027 tax.Changes for retirees
The tax exemption for retirees will be reduced by a third, lowering the ceiling from approximately 4,500 euros to 3,000 euros. This change would not affect retirees with annual incomes below 30,000 euros, but households earning more than that would see an increase in taxes.Impact on long-term illness benefits
Benefits received for long-term illnesses will no longer be exempt from income tax and will be subject to 50% taxation. A new tax ceiling for termination of employment benefits is introduced, targeting only the top 5% of employees receiving the highest benefits, according to Minister of Labor Jean-Pierre Farandou.Preventing tax optimization
The extension of the differential contribution on high incomes, introduced in 2025, continues to prevent tax optimization strategies allowing the wealthy to pay less than 20% tax on their annual income. Inheritance and gift taxes will see a temporary boost, with the exemption for family gifts raised to 50,000 euros from the current 31,865 euros.New pacts for business and families
A new "Papin Pact" is introduced to complement the existing "Dutreil Pact" for business takeovers outside the family circle. The "Dutreil Pact" allows for significant tax reductions in the case of business transmission within the family.New zero-interest loans for young parents
In the realm of real estate, a new zero-interest loan (PTZ) is introduced for young parents, targeting families expecting or caring for a child under three years old. This complements the existing PTZ.Revised payment schedule for energy checks
The energy check will see a new payment schedule, starting in January instead of spring, and the government expects 100,000 additional beneficiaries due to improved data cross-referencing. Additionally, a new measure allows for a 17% withdrawal from forgotten savings held in the Deposit Fund, with the state refunding the withdrawal if requested through Ciclade.fr, ensuring no loss for the account holders or their heirs.Partial deindexing and budget adjustments
The budget texts also include partial deindexing of pensions, freezing of social, family, and housing assistance (except for social minimums like Aspa, RSA, and AAH), and a refocusing of the school start allowance. These measures are primarily included in the Sécu budget and are part of the broader fiscal adjustments for 2027.
