Good news for taxpayers. While inflation is expected to reach 5% in 2023 according to the latest forecasts from INSEE, the government intends to cushion this shock on the French tax sheet. According to information from Les Échos, confirmed in Le Figaro, Bercy, in full preparation of the 2024 finance bill, has decided to index the income tax scale to the evolution of price increases. In other words, the tranches will be revalued to take into account inflation.
If the level of this increase still needs to be fixed, it should be around 4.9%. While this increase remains lower than last year’s 5.4%, it is higher than previous readjustments, when inflation was lower. Concretely, the minimum tax threshold will no longer be set at 10,778 euros of annual income. This level will be increased according to the increase in prices. Ditto for the following levels.
For the executive, indexation will allow many French people, non-taxpayers, not to become taxable. And will prevent current tax payers from seeing their taxes increase. An important decision, while many households remain crushed by inflation. For the government, this is not a trivial decision: it is depriving itself of several billion tax revenues next year. But while the executive had to deny all rumors relating to an increase in taxes, not acting would have been politically delicate, to say the least.