French tax rules evolve every year, and 2026 is shaping up to be a meaningful turning point, particularly for higher earners, retirees, donors, and small business owners. Unlike previous years, the 2026 budget is less about technical tweaks and more about rebalancing tax effort, controlling public finances, and closing perceived loopholes.
If you live in France, plan to move, or structure income or assets here, understanding these changes early is essential. Below is a clear breakdown of what’s changing for French taxes in 2026, what is still under parliamentary debate, and what expats should pay particular attention to.
Table of contents
Potential freeze of the income tax scale (barème de l’impôt sur le revenu)
One of the most closely watched measures in the 2026 budget is the possible freeze of the income tax brackets.
In recent years, the income tax scale was often indexed to inflation, preventing “fiscal drag” when salaries rose only to keep pace with prices. For 2026, the government initially proposed not indexing the barème, meaning:
- Tax brackets would remain unchanged
- Nominal income increases could push taxpayers into higher brackets
- Effective tax pressure could rise without any real increase in purchasing power
What this means in practice
A freeze disproportionately affects:
- Middle-income households
- Retirees with indexed pensions
- Dual-income families
Parliamentary debate is ongoing. The Senate has discussed partial reindexation of the first bracket, but final outcomes depend on the budget compromise process. Expats should be aware that 2026 may mark the end of automatic inflation protection for income tax.
Retirement pension tax allowance reform (highly sensitive for expats)
Another headline 2026 proposal concerns the taxation of pensions.
What’s changing (as proposed)
The government has proposed replacing the current 10% pension allowance with a flat allowance:
- 2,000 € for a single person
- 4,000 € for a couple
Why this matters
- Lower pensions could benefit
- Higher pensions could face higher effective taxation
- The reform would simplify the system but change outcomes significantly
This measure is politically contested and still subject to amendment. For retirees, especially foreign retirees relying on pensions, this is one of the most important items to monitor for 2026 planning.
Extension of the high-income minimum tax (CDHR)
France is continuing its focus on very high earners through the Contribution Différentielle sur les Hauts Revenus (CDHR).
Key principle
The CDHR ensures that households above very high income thresholds pay a minimum average tax rate of 20%, regardless of deductions or structuring.
For 2026
- The mechanism is extended, not temporary
- Thresholds remain focused on the top end of the income scale
- Designed to counter aggressive optimisation
This measure mainly affects:
- High earners with diversified income streams
- Individuals using deductions to significantly lower their effective tax rate
New tax targeting “patrimonial holding” structures
A major structural change in the 2026 budget is the introduction of a new tax measure targeting patrimonial holding companies.
Objective
The government aims to limit strategies where holding structures are used primarily to:
- Accumulate wealth
- Defer or reduce taxation
- Avoid personal-level tax without genuine economic activity
Important nuance
- Professional holdings and active business assets are excluded
- The focus is on purely patrimonial structures
For expats using holding companies, SCI structures, or layered ownership, this reinforces the importance of substance, purpose, and documentation.
> You might be interested in this article: Navigating French income tax for expats
Changes to donation tax relief (“coluche” donations)
The 2026 budget includes a more generous approach to charitable giving.
What’s changing
- The ceiling for donations eligible for 75% tax relief is raised to 2,000 € per year
This benefits taxpayers who regularly donate to:
- Charities assisting vulnerable populations
- Food banks and social aid organisations
Beyond that ceiling, standard donation relief rules continue to apply.
Removal of certain tax reliefs
To offset revenue pressures, several targeted tax advantages are being removed in 2026.
Notable removals
- Reduction for school fees (secondary and higher education)
- Income tax exemption for daily allowances related to long-term illness (ALD)
These removals may particularly affect:
- Families with children in education
- Individuals previously benefiting from health-related exemptions
New Taxes on Tobacco and E-Cigarette Liquids
As part of public health policy, the 2026 budget introduces:
- Further increases in tobacco taxation
- New or increased taxes on e-cigarette liquids
These changes primarily affect consumer prices, but they are also part of France’s broader cost-of-living environment.
VAT Franchise Threshold Changes for Micro-Entrepreneurs
For freelancers and small business owners, VAT thresholds are adjusted.
New thresholds (as proposed)
- Standard VAT franchise threshold set at 37,500 €
- A specific lower threshold of 25,000 € remains for certain property-related works
This impacts:
- Independent professionals
- Self-employed expats
- Side activities alongside salaried or pension income
Crossing these thresholds triggers VAT obligations, with cash-flow and pricing implications.
What expats should take away for 2026
French tax changes in 2026 point to three clear trends:
- Less automatic protection against inflation
- Greater focus on high incomes and asset structures
- Gradual removal of niche reliefs
For expats, retirees, and future residents, forward planning matters more than ever, especially around pensions, income timing, business structures and donations.
Final notes
The 2026 French tax landscape is still being finalised, but the direction is clear: broader bases, fewer exceptions, and closer scrutiny of income and structures.
If you live in France, or plan to, staying informed and reviewing your situation early can help you adapt calmly rather than react later.
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