Adjustment of income tax brackets
The 2023 income tax scale is indexed to inflation at +5.4%. This revaluation therefore results in an increase in income determining the gradual entry into the different tax brackets (11%, 30%, 41% and 45%) in order to neutralize, in theory, the effects of inflation on the household tax level. Entry into the tax will thus be made from €10,777 (€10,225 last year) in the first installment at 11% while the second installment at 30% will start at €27,478 against €26,070 previously. These brackets concern income which has already been deducted at source in 2022 but whose final tax calculation will not take place after the spring 2023 tax return.
It must be clearly understood that the revaluation of the tax scale is not made to directly compensate for consumer price inflation but to neutralize the indirect effect of the increase in wages or pensions, necessarily stronger when inflation is significant. Households whose income increases less rapidly than inflation, and there will have been many of them in 2022, are therefore winners from the point of view of the scale of tax to be paid.
| The above tax rates are applicable for 1 share of family quotient | ||
| REVENUES 2021 | Revenues 2022 | Rate |
|---|---|---|
| Up to €10,225 | Up to €10,777 | 0% |
| From €10,225 to €26,070 | From €10,777 to €27,478 | 11% |
| From €26,070 to €74,545 | From €27,478 to €78,570 | 30% |
| From €74,545 to €160,336 | From €78,570 to €168,994 | 41% |
| Over €160,336 | Over €168,994 | 45% |
Family quotient and discount
The ceiling for the tax benefit of the family quotient will also be increased to €1,678 per half-share (€1,592 previously). For low-income households, the amounts used to calculate the discount are increased in the same way.
Easier modulation of withholding tax
Until now, the downward modulation of the withholding tax rate was only possible when the difference between the planned tax and the new estimated amount is greater than 10%. When the discrepancies to be corrected were significant, there was therefore no problem, but it was common for taxpayers to try to update their tax rate without succeeding because the tax difference calculated on the basis of the new estimated income did not was not big enough. To fix this, the 2023 finance law has planned to lower the difference threshold allowing modulation from 10% to 5%.
This measure has the effect of extending the field of taxpayers who can benefit, on request, from a downward modulation of their withholding tax rate. The request is made directly via his personal space on the site www.impots.gouv.fr in the section “ manage my withholding tax ” and ” update following an increase or decrease in your income “. The form then requires you to enter your new estimated income.
Tax credit for childcare for children under 6
The tax credit for looking after children under 6 years old outside the home (in a crèche, a day care centre, a leisure center or with a childminder) has been improved. Its ceiling, of €2,300 for expenses incurred in 2021 per dependent child, increases to €3,500 for those incurred for the year 2022. From 2023, this tax credit may thus reach €1,750 for expenses carried out in 2022 (50% of €3,500) compared to €1,150 previously, i.e. a gain in purchasing power of €600 per child for these services. In the context of joint custody, the tax credit is shared between the two parents.
Doubling of the land deficit
The finance law for 2023 provides for a doubling of the current ceiling for the land deficit, from €10,700 to €21,400, as soon as the completion of energy renovation works allows E, F and G classified housing to be released from their energy sieve status. . This new ceiling will apply to expenses incurred between January 1, 2023 and December 31, 2025.
An owner who carries out work in a dwelling can generate a land deficit if the amount of the work exceeds the rents collected. Under certain conditions, this land deficit can reduce the overall income within a limit currently set at €10,700 and thus reduce the taxpayer’s tax during the year in which the work is carried out. Concretely, if a taxpayer taxed at 30% finds a land deficit of €10,000, he will be able to reduce his overall income by the same amount and save €3,000 in income tax.