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French Government Explores Cutting Retiree Tax Break in €40 Billion Savings Plan

Public Accounts Minister Amélie de Montchalin signals potential removal of the 10% pension tax allowance and elimination of tax niches to address France's growing deficit.

Pour rééquilibrer les comptes de la France, faudra-t-il demain supprimer l’abattement fiscal sur les pensions ?
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« Ce n'est pas votre âge qui doit définir votre contribution », estime la ministre des Comptes publics Amélie de Montchalin.
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Overview

  • Amélie de Montchalin has outlined a €40 billion savings target for the 2026 budget to reduce France's public deficit, which reached 5.8% of GDP in 2024.
  • The government is considering abolishing the 10% tax allowance for retirees, a measure introduced in 1978, as part of broader fiscal reforms.
  • Eliminating the retiree tax deduction could increase taxes for 8.4 million retirees, with some becoming taxable for the first time, sparking opposition from unions like UNSA-Retraités.
  • At least 50 of France's 467 special tax breaks are under review for elimination to improve revenue collection.
  • Montchalin also aims to tackle social welfare fraud and rising sick leave costs, which have increased by 25% since 2021, costing €10.2 billion in 2023.