No major overhaul of the income tax scale this year, but a significant revaluation of the thresholds due to inflation: here is what changes in 2022 for the progressive scale. Adopted as part of the finance law for 2022, it comes into force on January 1.
The income tax schedule can be confusing. Let us try to clarify the schedule of the scale below: it is the one appearing in the finance law for 2022, to be published tomorrow, Friday, December 31 at Official newspaper following its (almost complete) validation by the Constitutional Council. This scale is therefore the one that will be in force from January 1, 2022.
It will apply the tax to be paid in 2022, following the declaration of spring 2022, on the basis of reported income for the year 2021.
| Income bracket by tax share | Rate applicable for the tranche |
|---|---|
| Up to 10225 | 0% |
| From 10225 26070 | 11% |
| From 26070 74545 | 30% |
| From 74545 160336 | 41% |
| Over 160,336 | 45% |
Scale appearing in the finance bill for 2022.
How to read this scale?
The income tax scale is progressive. This means that no one is taxed 45% on all their income: each income bracket is taxed at the corresponding rate.
Thus a single person (i.e. 1 tax share) with net taxable income of 50,000 euros is subject to a rate of 0% on 10,225 euros, 11% on the income bracket of 10,225 26,070 euros, and 30% on the amount above 26,070 euros. After a complete overhaul of the scale 2 years ago, with the transformation of the 14% bracket into the 11% bracket, these tax rates do not vary this year.
Which brackets apply to your income?
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Why is the income tax rate increasing?
The income tax scale thresholds are up 1.4%, a revaluation taking into account the price increase in 2021 when the 2022 draft budget was tabled last September. Last year, this revaluation of the scale was only 0.2%.
Thus the threshold for entering the scale (11%) goes from 10 084 euros to 10225 euros. Quite counterintuitively, an increase in the thresholds of the scale is good news for taxpayers: this year, for a fiscal part, 10 084 euros are taxed 0%; next year 10225euros will thus escape any tax. Raising the scale thus aims to follow the evolution of the cost of living, and therefore to avoid any increase in indirect taxes.
Conversely, a freeze on the scale would have resulted in many losers. A downside, however: the increase so limited to 1.4%, the revaluation of the scale could have been more advantageous, since the latest figures from INSEE announce an inflation of 2.8% over the last twelve months. In short, this increase is rather good news for taxpayers … even if it could have been more favorable.
Is it the same scale for the withdrawal at the source?
For the withholding tax, levied each month, the schedule is slightly different. The General Directorate of Public Finances (DGFiP) updates your rate each year in September following your spring declaration. In September 2021, your rate was thus updated on the basis of your 2020 income. This update is made on the basis of the scale currently in force, in other words the scale of the 2021 tax on 2020 income.
The above scale will be used update your withholding rate in September 2022, and therefore calculate your balance to settle at the end of summer 2022.