On October 1st, the Government introduced the 2027 Finance Bill, aiming to reduce the public deficit to 5% of GDP, down from 5.4% in 2026. This article explores key measures affecting households, pending debates in the National Assembly and Senate.
"The 2027 Finance Bill is about securing our nation's future by reducing the public deficit while continuing to invest for future generations." - David Amiel, Minister of Public Action and Accounts
Income Tax Scale Adjusted by 2.1%
The bill proposes a 2.1% adjustment to the income tax scale, aligned with the estimated inflation rate for 2026. This adjustment aims to protect 20 million households from a tax increase of nearly 4 billion euros and prevent around 500,000 households from entering the tax bracket. The proposed tax scale for 2027 is as follows:
| Taxable Income Bracket (per share) | Tax Rate |
|---|---|
| Up to €11,844 | 0% |
| €11,845 to €30,200 | 11% |
| €30,201 to €86,353 | 30% |
| €86,354 to €185,737 | 41% |
| Over €185,737 | 45% |
Retirement Measures
For retirees, the bill introduces two significant changes:
- The 10% deduction ceiling on pensions will decrease from €4,439 to €3,000.
- Retirement pensions exceeding €1,260 will not see inflation-adjusted increases in 2027.
These measures are projected to save 5.5 billion euros.
Family Allowances Frozen
The bill plans to freeze all family benefits, typically adjusted annually on April 1st. Discussions are ongoing to better target the back-to-school allowance based on children's age-specific needs.
Student Aid Adjustments
For students, the bill proposes:
- Introducing tuition fees for non-scholarship students in preparatory classes.
- Offering an "option right": choose between housing aid (APL) or being declared as a dependent on parents' tax returns, or claiming a maintenance allowance (if not fiscally attached).
Donation Incentives
Two significant changes for donations are proposed:
- A temporary measure allowing cash donations between January 1 and June 30, 2027, with a 6% tax rate up to €100,000 for beneficiaries under 50.
- Increasing the tax-free limit for age-conditioned cash donations from €31,865 to €50,000.
Enhanced Zero-Interest Loan for Families
The zero-interest loan (PTZ) will extend to families expecting a child or with a child under three, meeting income criteria. The "parenting PTZ" can be used once per beneficiary, including those who have previously used a PTZ. The annual spending cap of 2.1 billion euros, set since 2016, will be removed.
Vehicle Taxation Adjustments
While automotive taxation remains stable, adjustments include:
- For employer-provided vehicles, VAT will be calculated based on the normal value of the service, especially if employee rent is below market rate.
- From January 1, 2027, microhybrid vehicles will lose any weight-based penalty exemptions.
Understanding the Finance Bill Process
Each autumn, the government presents the "finance bill" for the following year, detailing projected state revenues and expenditures. It must be submitted to the National Assembly by the first Tuesday of October. Parliament has 70 days to review and decide on the bill. The National Assembly has 40 days for the first reading, followed by a 20-day Senate review. A joint committee of deputies and senators resolves remaining issues. If successful, both houses approve the joint text. If disagreements persist, the National Assembly has the final say. The finance bill is finalized and published in the Official Journal by year's end, except in exceptional cases. Most fiscal measures apply the following year, but some may be retroactive to the bill's presentation date.
For more details on the 2027 Finance Bill, visit La finance pour tous.
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