Following our article presenting the measures in the 2026 Finance Act concerning businesses, we set out below the main measures impacting individuals.
This year again, a large number of measures, some more significant than others, have been taken. We note two in particular:
- The creation of a new tax status for private landlords, aimed at stimulating the rental of apartments for use as primary residences;
- The increase in the CSG (General Social Contribution) rate on capital income.
This presentation has three chapters:
- Tax Calculation Measures,
- Measures concerning certain tax categories,
- Miscellaneous provisions.
I- TAX CALCULATION MEASURES:
Scale with indexation:
The scale brackets and associated thresholds are increased by 0.9%.
Differential tax on high incomes:
This contribution is renewed and will be maintained until the taxation of income for the year in which the draft finance bill identifies a general budget deficit of less than 3% of the gross domestic product.
In addition, the law provides some technical clarifications. Among these is the following addition concerning taxpayers who transfer their residence abroad:
“- Taxpayers domiciled in France who transfer their residence abroad are liable for the contribution for the year of their departure on the income they received during the year of their departure up to the date of their departure, on the industrial and commercial profits they earned since the end of the last taxed fiscal year, and on all income they acquired but did not have the right to use before their departure. For these taxpayers, the taxes mentioned in paragraph 2 of section III (Income Tax and exceptional contribution on high incomes) are determined on the basis of this same income.
– Taxpayers previously domiciled abroad who transfer their residence to France are liable for the contribution for the year they establish their residence in France on the income taxable as a result of establishing their residence in France, from the date of that establishment. For these taxpayers, the taxes mentioned in the same 2° III (i.e., income tax and the exceptional contribution on high incomes) are determined in respect of these same incomes.”
Tax reductions and tax credits:
- Tax reduction for payments to investment funds: Here are the main contributions of the law:
- Raising from €15 million to €16.5 million the financing ceiling that can benefit all companies whose direct or intermediated investment entitles them to the tax reduction;
- Elimination of the income tax reduction for investments in FCPIs (investment funds for innovation), except for investments in JEIs (young innovative companies);
- Several measures facilitate investment conditions for FCPIs (French venture capital funds) in JEIs (young innovative companies);
- Creation of a new category of innovative young company: “impact innovation young company”. These are, essentially, companies that operate to support vulnerable people due to their economic or social circumstances and that invest between 5 and 20% of their expenses in research.
- Tax reduction for donations: For donations benefiting from the tax reduction at the rate of 75% (in particular, the “Coluche” reduction, donations to associations helping victims of domestic violence), the payment ceiling is increased to €2000 (instead of €1000).
- New tax reduction for purchasing housing at the Olympic Games site: Taxpayers domiciled in France who acquire (between January 1st 2029, and December 31st 2032) a residential property after the 2030 Olympic and Paralympic Games (at the Fort des Têtes site in the municipality of Briançon) are eligible for an income tax reduction.
- The maximum tax base is €400,000 per taxpayer;
- The tax reduction rate is set at 30%.
- Tax credit for services rendered to individuals: Some clarifications are provided regarding services provided outside the taxpayer’s home that are treated as services provided at the residence, thus qualifying for the tax credit. Among them:
- The annual amount of expenses incurred for eligible services provided outside the home must not exceed, for each set of services, the annual amount of expenses incurred for eligible services provided at home;
- For people who need personal mobility assistance in their local environment to help them remain at home, home meal delivery is now considered a service provided at the taxpayer’s residence and eligible for the tax credit for personal services, even if it is not included in a package of services that includes activities carried out at the residence.
These measures are applicable from income tax due for the year 2026.
II- MEASURES CONCERNING CERTAIN TAX CATEGORIES:
Wages and salaries:
- Extension of the tip exemption until December 31st 2028: This scheme concerns sums voluntarily given by customers for the service to employees whose monthly remuneration does not exceed 1.6 times the minimum wage (SMIC).
- Details on “management packages” and “bonds for subscribers to shares in business creators” (BSCPE): These articles (24 and 25) of the finance law provides a set of detailed specifications on the “management package” regime, which we will not detail here. However, we can provide them to you upon request.
- Travel expenses covered by the employer: The tax exemption for the optional employer contribution, up to 25% of the price of season tickets (i.e. beyond the mandatory contribution of 50% of the price of the season ticket), is extended until December 31st
Investment income:
The option to apply the progressive tax scale (instead of the flat rate) is no longer irrevocable.
This measure applies to income tax due for the year 2026 and subsequent years.
Rental income:
This law establishes a depreciation scheme for unfurnished leased premises.
- Eligible properties:
- located in France;
- in a multi-family residential building (individual villas are therefore excluded);
- either acquired new or under construction;
- or that the taxpayer acquires, which are or have been the subject of work contributing to the production or delivery of a new building (within the meaning of the building code), or for which the improvement work represents at least 30% of the acquisition price;
- and rented out as a primary residence;
The depreciation deduction is applicable, under the same conditions, to properties that the taxpayer has built.
This regime does not apply to income from housing or real estate company shares where ownership rights are divided (except in the event of the death of one of the spouses subject to joint taxation).
- Rental option: The benefit of the deduction is subject to an irrevocable option which must be exercised when filing the income tax return for the year of acquisition or completion of the work.
The owner must commit to renting for a minimum period of nine years, respecting rent and income ceilings, to a person other than a member of their tax household and a relative or in-law up to and including the second degree.
Note: The lease must take effect within 12 months of the date of acquisition or completion of the work.
- Depreciation calculation:
- Calculation basis: Depreciation is calculated on the net purchase price of the property, plus the amount of the work (the value of the land, estimated at a flat rate of 20% of the purchase price and the work, must be subtracted from this basis).
- Depreciation rate: New housing: It is set at 3.5% for housing intended for intermediate rental, 4.5% for social rental, or 5.5% for very low-income rental. Renovated housing: The rate is set at 3% for housing used for intermediate rental, 3.5% for social housing, or 4% for very low-income housing.
- Double deduction limit
- The total depreciation claimed on a property cannot exceed the purchase price excluding land value;
- The total depreciation deductions cannot exceed €8,000 per year per tax household. This amount is increased by €2,000 or €4,000 when at least 50% of the gross income from these properties is allocated respectively to social housing or very low-income housing.
- Double deduction limit
Capital gains on movable property:
Capital gain placed under tax deferral upon contribution to a company: In the event of sale for consideration, repurchase, redemption or cancellation of the contributed securities, if this event occurs within three years of the contribution, the amount of reinvestment intended to avoid the end of the deferral increases from 60 to 70% of the proceeds of the sale. The planned timeframe for reinvestment is extended from two to three years.
In addition, the holding period for the reinvestment is set at 5 years.
The holding period for securities in the event of a gift of securities is extended to 11 years.
III- MISCELLANEOUS PROVISIONS:
“Pacte Dutreil”:
The finance law makes two changes to the “Dutreil Pact” which, as a reminder, allows for the exemption of part of the inheritance tax on the transfer of a business.
- Exclusion of assets not used for professional activity: Thus, the exemption does not apply to the portion of the market value of shares or stock of assets that are not exclusively used by the company, for a period of at least three years before the transfer or, failing that, since their acquisition, and until the end of the individual commitment to retain them.
- Extension of the individual holding period: The period is extended to 6 years (instead of 4 years). This extension applies to the transfer of shares in companies and sole proprietorships.
Increase in CSG on capital income:
The CSG rate on capital income is increased to 10.6%. However, it remains fixed at 9.2% for rental income, capital gains on real estate, life insurance, home savings plans, and PEPs.
Entry into force of the increase:
- Regarding the CSG due on investment income, from the taxation of income for the year 2025 (in particular capital gains on securities).
- regarding the CSG due on investment products, from January 1st 2026.
It was obviously not possible to provide detailed information, particularly regarding the application of the new regulations, in this brief overview of the finance law concerning individuals. Furthermore, we have only presented the provisions that seem most relevant to us.
We remain at your disposal to provide any further explanation you may require.
