The adoption of the Finance Act for 2025 followed an unusual timeline. In fact, the examination of the draft law, which was presented in October 2024, was interrupted by the resignation of the government on December 5.
To ensure the continuity of public services at the beginning of 2025, Parliament adopted special Law No. 2024-1188 on December 20, 2024, as provided for by the Organic Law on Finance Acts. This law made it possible to collect taxes and raise loans to finance state and social security expenditures.
The draft law returned to Parliament’s agenda in January 2025, and the adoption process led to the enactment of Finance Act No. 2025-127 of February 14, 2025, for the year 2025.
Below is an article-by-article presentation of the main tax measures adopted in the law.
Individuals: Measures in the 2025 Finance Act
Increase in the income tax scale.
Monthly billing basis |
Proportional rate | |
Under 1 620 € |
0 % |
|
Over or equal to 1 620 € and under 1 683 € |
0,5 % |
|
Over or equal to 1 683 € and under 1 791 € |
1,3 % |
|
Over or equal to 1 791 € and under 1 911 € |
2,1 % |
|
Over or equal to 1 911 € and under 2 042 € |
2,9 % |
|
Over or equal to 2 042 € and under 2 151 € |
3,5 % |
|
Over or equal to 2 151 € and under 2 294 € |
4,1 % |
|
Over or equal to 2 294 € and under 2 714 € |
5,3 % |
|
Over or equal to 2 714 € and under 3 107 € |
7,5 % |
|
Over or equal to 3 107 € and under 3 539 € |
9,9 % |
|
Over or equal to 3 539 € and under 3 983 € |
11,9 % |
|
Over or equal to 3 983 € and under 4 648 € |
13,8 % |
|
Over or equal to 4 648 € and under 5 574 € |
15,8 % |
|
Over or equal to 5 574 € and under 6 974 € |
17,9 % |
|
Over or equal to 6 974 € and under 8 711 € |
20 % |
|
Over or equal to 8 711 € and under 12 091 € |
24 % |
|
Over or equal to 12 091 € and under 16 376 € |
28 % |
|
Over or equal to 16 376 € and under 25 706 € |
33 % |
|
Over or equal to 25 706 € and under 55 062 € |
38 % |
|
Over or equal to 55 062 € |
43 % |
Income Tax – Key Measures in the 2025 Finance Bill
Adjustment of income tax brackets
The income tax (IR) scale brackets, along with the associated thresholds and limits, will be increased by 1.8%.
Donations to organizations helping people in difficulty
Organizations that support individuals in difficulty will continue to be eligible for tax-deductible donations.
Associations that support victims of domestic violence will now also qualify for tax deductions for donations made to organizations that assist people in need.
All amounts donated for this purpose from January 1, 2024, onwards will be considered, up to a limit of €1,000.
Tax Exemption for Tips
Tips given by customers for services have been exempt from social security contributions and income tax since 2022.
This exemption will be extended into 2025.
Introduction of a Differential Contribution for High Incomes
A new contribution will be introduced to ensure a minimum taxation rate of 20% on the highest incomes (above €250,000, or double that amount for a couple), with a reduction mechanism to avoid sharp threshold effects.
Increase in Penalties for Polluting Vehicles
The CO2 tax (“malus CO2”) and the weight-based tax (“malus masse”) will be increased, and the deduction system will be adjusted to better account for the depreciation of used vehicles.
- The CO2 tax will be gradually increased and, by 2027, will apply from 103 g CO2/km, with a maximum amount of €90,000.
- The weight-based tax will apply to vehicles weighing over 1,500 kg from 2026.
- The deduction on the penalty tax will be adjusted and become more favorable for newer vehicles.
- A retroactive penalty will be introduced in 2026 for vehicles that were not taxed at the time of their first registration.
How does the penalty tax on polluting vehicles work?
Reduced VAT for Heating-Related Work
The reduced VAT rate of 5.5% will be extended to include district heating systems powered by renewable energy.
Boilers using fossil fuels will be excluded from this reduced rate, except for maintenance and repair of existing equipment.
Tax Exemption for Gifts to Descendants for Home Purchase or Renovation
Gifts made to children, grandchildren, great-grandchildren, or, in their absence, nieces or nephews, intended for the purchase or energy renovation of a home, will be exempt from gift tax within a double limit:
- €100,000 per donor per recipient, and
- €300,000 per recipient in total.
Med venlig hilsen / Kind regards
Cabinet Nicolas BRAHIN
Advokatfirma i NICE, Lawyers in NIC
Camilla Nissen MICHELIS
Assistante – Traductrice
1, Rue Louis Gassin – 06300 NICE (FRANCE)
Tel : +33 493 830 876 / Fax : +33 493 181 437
