The draft state budget for 2026, or the Finance Bill (PLF), is currently under review. From Monday at 9 a.m. until Wednesday evening, the committee will examine the first part of the PLF, the one dedicated to revenue, with a planned arrival in the main chamber on Friday and a final vote on November 4th. This will be followed by the review of expenditures, and then the Senate.
The draft budget plans for a slight decrease in the funding for ministries, with the exception of the armed forces, which receives an increase of 6.7 billion euros, the interior ministry (600 million), and the justice ministry (200 million).
The measures proposed by the government would generate approximately 14 billion euros in additional revenue, as well as around 17 billion euros in savings on expenditures.
Here are the main measures presented by the government, which could be subject to change during the parliamentary budget review.
Revenue
- A freeze on the income tax scale and the CSG: The brackets of the income tax scale will not be adjusted for inflation, which will lead to some households becoming taxable and others paying more income tax. Combined with the Generalized Social Contribution (CSG), the government expects 2.2 billion euros from these two measures.
- Modification of the tax allowance for retirees’ income: The 10% allowance that retirees benefit from on their pension is being replaced by a fixed allowance of 2,000 euros. This measure will slightly reduce the income tax for some retirees, but increase it for the wealthiest retirees.
- Differential Contribution for High Incomes (CDHR): This contribution, created in 2025, is extended for one year. Applied to households with incomes exceeding 250,000 euros for a single person and 500,000 euros for a couple, it sets a minimum tax rate of 20%.
- Elimination of 23 tax loopholes: The 2026 draft budget plans to eliminate 23 tax loopholes deemed obsolete or ineffective out of the 474 existing ones, for a gain of approximately 5 billion euros. These include the tax exemption for daily allowances for long-term illness and the tax reduction for school expenses in secondary and higher education.
- Tax on small packages and smoking products: This tax would target small packages delivered by companies based outside the EU, particularly from China. The government expects 500 million euros from it. In response to the growth of vaping, all smoking products will be taxed, with or without tobacco or nicotine.
Expenditures
- Blank year for social benefits and pensions: This measure plans to freeze retirement pensions and social benefits, including family allowances, by not indexing them to inflation.
- Starting in 2027 and subsequent years, the proposed text also plans to under-index pensions (relative to inflation) by 0.4 points.