You inspect your September bulletin and… your net salary drops without warning? No, your employer did nothing illegal. The explanation may lie in the income tax line deducted from the source of your newsletter.
The fiscal calendar shifts in the fall. Shortly after having received the notices of property tax, unusual notices of housing tax (and TV license fee) arrive with 0 euros to pay for a large majority of French people… and here comes the bank debit of the balance of the tax 2022, September 26 for nearly 11 million households. Ultimate tax crisis in this decidedly busy week: you discover on your September pay slip that your withholding tax suddenly increases. Scandal? Not sure. More often than not, it is logical and automatic.
What to look for on your payslip
Go to the bottom of your payslip. The mention the reference net pay before income tax is most often the one that is highlighted: it is your usual net salary, excluding tax.
Then the bulletin details your withdrawal rate, the amount withdrawn in September 2022, and finally the net pay in euros, your net salary after income tax: this amount is paid into your account. Simply compare your August and September 2022 report cards to find out if your drop in salary is due to an increase in your source tax rate.
Withholding tax: how to read your new payslip
Why does this rate change in September?
But why now? Because the regulations set September 1 as the deadline from which the tax authorities can update the rate, downwards… or upwards. It’s now the same routine every year. In the spring of 2022, you declared your income for 2021. The General Directorate of Public Finance (DGFiP) then recalculates your personalized withholding tax rate on the basis of your 2021 income.. And we have to wait until September for this updated rate to be applied.
Most often, this update is only visible from the payslip received at the end of September. Or mid-September for taxpayers (landlords, self-employed, etc.) paying installments with deduction at source. More rarely, this September 1 update can be taken into account from the salary or retirement pension for the month of August, especially if the payment occurs at the beginning of September.
Tax at source: should you check or even correct your new rate?
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What to check on the tax website
Of course, do not hesitate to check that this update corresponds to that provided by the tax authorities. How? Direction impots.gouv.fr, private space, section manage my source deduction: click on consult your rates. The rate applicable to your September salary must appear opposite the date 01/09/2022. You can trace your last rate changes by clicking on previous situation.
What are your options for changing rates?
Two possibilities. The first: the rate increase applied by the DGFiP is unwelcome… You have just lost income (yourself or your spouse) in the course of 2022. You can claim a reduction in your withholding tax rate if this is justified . Click on the button update following an increase or decrease in income below the rate displayed in your space. The DGFiP then asks you for a estimate of the 2022 income of your tax household to adjust the tax rate. Please note: the new amount of the withholding tax at source must decrease by at least 10% compared to the current withholding tax for the DGFiP to update your rate. If the DGFiP confirms the rate update, the reduction will be effective on your October or November salary depending on your employer’s accounting calendar. The only problem: you will have to repeat this process in January 2023 to avoid another rate hike.
Taxes: you will be able to reduce your withholding tax more easily in 2023
Second possibility: couples where there is a large income gap can opt for the individual rate. This obviously does not change anything in the level of taxation of the household but it can soften a rise that is too heavy for the spouse who suffers the other’s salary increase. The DGFiP then applies a separate rate to each member of the household, proportionally to their individual resources. Choosing the neutral rate (non-personalized rate), however, has no impact on your monthly tax: a neutral rate appears on your slip but the DGFiP debits or reimburses the rest each month directly to your bank account.
Why does the final invoice not change anything
So…scandal? Or not? If your income has increased in 2021, this month of September has indeed all the double trouble: insufficiently withdrawn during 2021, you very likely have a balance punctured on September 26 on your account, and your rate is soaring on the bulletin of the same month! This unpleasant double surprise passes, the impact will be neutral on your annual tax bill. As every year, the annual tax is calculated to the nearest euro in the spring following the declaration, in order to supplement or reimburse what has already been deducted at source.
How to anticipate a rise in the levy rate
If your income continues to increase in 2022, you can already notify the Public Treasury, via the levy at source menu at impots.gouv.fr (update following an increase). What interest for you? This approach will increase your rate, and therefore increase your monthly tax at source… but it will avoid having too large a balance to regularize in the fall of 2023. Unlike a drop in income, the upward discounting does not is subject to no conditions.
Obviously nothing obliges you to claim this rate increase. You are free to wait for the 2023 declaration to report the increase in your standard of living to the Public Treasury.