When it’s time to fill out your return, (re)discover how income tax is calculated and how the bracket system works.
But how the hell is income tax (IR) calculated? The question then arises that you must complete your tax return as every year by June 8 at the latest.
Know your taxable income
The first step is to know your net taxable income. You get it from the sum of wages, declared profits for self-employed people, property and capital income, or even pensions received last year, in this case in 2021. Then, these earnings, you have to deduct, depending on your situation, certain deductible expenses such as alimony or even retirement savings.
Income from your professional activity benefits from a specific allowance. To take into account the expenses necessary for your professional activity – such as mileage – the tax authorities retain only part of your wages and salaries in the tax base. By default, it applies a 10% discount or, if it is more favorable to you, you can replace this automatic discount with the actual costs system.
Less than 50% of taxpayers pay income tax
In recent years, apart from during the very particular blank year, of the more than 38 million tax households, approximately 43% have paid income tax, i.e. slightly more than 16 million tax households according to statistics from the General Directorate of public finance (DGFiP).
The following operation consists of dividing your net taxable income by the number of family quotient shares. To fully understand the manipulation, Bercy provides two simple examples:
- A single net taxable income of 32,000 euros. In his case, his family quotient is on the one hand. He must therefore carry out the operation 32000euros/1 = 32000euros.
- A couple husband or PACS, and their two minor children, with a net taxable income of 55,950 euros. Here, the couple has 3 shares (2 shares for the couple and a half share for each child). All he has to do is divide 55,950 euros by 3 = 18,650 euros.
The application of the progressive bar
It remains to apply the progressive scale of income tax. Contrary to what many taxpayers think, the rate of a bracket does not apply uniformly to all income. Here is the bar in effect.
| Income bracket per tax share | Applicable rate for the tranche |
|---|---|
| Up to 10225 | 0% |
| From 10225 26070 | 11% |
| From 26070 74545 | 30% |
| From 74545 160336 | 41% |
| Over 160336 | 45% |
Barme appearing in the finance bill for 2022.
Let’s go back to our examples above.
Example 1: the bachelor. With a net taxable income of 32,000 euros, our bachelor is taxed in 3 installments. Up to 10225euros of income, the 0% rate applies. On the slice between 10,225 and 26,070 euros, he therefore has 15,845 euros taxed 11%, or 1,742.95 euros. Remains 5930 euros of income taxed on the third tranche 30%, or 1779 euros. Result: 0 + 1742.95 + 1779 = 3521.95 euros.
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Example 2: the married couple with 2 children. For the couple with two minor children, with a net taxable income of 55,950 euros, the scale applied to the result obtained during stage 1 is, for the record, 18,650 euros. The income bracket up to 10225 euros is taxed at 0%. The remaining 8425 euros are subject to tranche number 2 at 11%, i.e. an intermediate amount of 926.75 euros.
For this 2nd example, there is one last operation to do: multiply the result obtained by the number of shares of the family quotient. In the case of our bachelor, he will pay 3521.95 euros in taxes. For the couple with two children, multiply 942 euros by the 3 shares of family quotient, i.e. a total of 2780.25euros tax pay (discounted, read below).
A global principle… and multiple special cases
Attention! Other elements may be involved in the calculation of income tax: the ceiling of the family quotientreductions or tax creditsthe mechanism of discountthe exceptional contribution on high incomes… So many elements which can increase or lower the final tax to be paid.
See also our (and how to use this investment income tax calculator)