My client area
Finance Act 2025: Changes in Taxation for Individuals
The 2025 Finance Act brings several notable changes in personal taxation. Through targeted adjustments, the government aims to promote greater equity among taxpayers while encouraging certain economic behaviors, particularly in housing. Focus on the main tax measures to know
Reform of Withholding Tax: Default Individualization
One of the key measures of the 2025 Finance Act concerns the reform of withholding tax for married or civil partnership couples.
Until now, a common rate was applied by default on household income. From September 2025, rate individualization becomes automatic. Each spouse will be subject to a rate calculated solely on their personal income. Common income will remain subject to the overall rate.
They will continue to pay a total tax of €7,735 together, distributed differently. This change aims to rebalance the tax burden within the couple, while still allowing the option to choose the household rate if desired.
Concrete example to understand these changes:
Let’s consider a married couple, Marc and Sarah.
Marc earns €55,000 per year, Sarah €30,000.
Before the upcoming reform:
- Marc and Sarah are subject to an overall withholding rate of 9.1%.
- Sarah pays a tax of €2,730 (30,000 x 9.1%) with this overall rate and Marc €5,005 (55,000 x 9.1%), totaling €7,735.
After the 2025 reform:
- Marc and Sarah will each benefit from an individualized rate.
- Sarah will see her tax reduced due to the application of a lower rate on her personal income.
- Marc will now pay tax determined on his personal income.
How to Adjust your Withholding Tax Rate?
Your withholding tax rate is determined by the tax administration.
You can request a modification of this rate throughout the year, including during your tax return.
To do this, simply go to your personal space on impots.gouv.fr, in the “manage my withholding tax” section.
You can then:
- Declare an increase or decrease in income;
- Report a change in situation, such as marriage, birth, divorce, or the death of your spouse.
It takes 1 to 3 months for your modifications to be taken into account.
Be careful, however, not to underestimate your installments to avoid incurring penalties.
Implementation of the Differential Contribution on High Incomes (CDHR)
Another strong measure introduced by the 2025 Finance Act, the CDHR (Differential Contribution on High Incomes) aims to ensure a minimum tax rate of 20% for the wealthiest households.
Who is Affected by the CDHR?
- Households whose fiscal reference income (RFR) exceeds €250,000 for a single person or €500,000 for a couple.
- Those already subject to the Exceptional Contribution on High Incomes (CEHR).
- Households whose average tax rate is less than 20% of the RFR.
How is the CDHR Calculated?
The calculation mechanism is as follows:
CDHR = 20% of RFR – (Income Tax + CEHR + Withholding Taxes)
A reduction mechanism is provided to mitigate the threshold effects.
The implementation is gradual, applying to income from 2024 to 2026, with the payment of an advance (95%) required between December 1st and 15th, 2025.
CDHR: What are the Consequences?
The implementation of this contribution:
- Will increase the tax burden for certain high-income households;
- Will require a review of income tax management strategies;
- Will potentially impact investment choices and asset management decisions.
Extended Exemptions for Family Gifts
To encourage access to housing and energy renovation, the 2025 Finance Act introduces new gift tax exemptions of up to €100,000 per donor, and €300,000 per beneficiary in case of multiple gifts.
These exemptions concern:
- The acquisition of a new home or one under construction;
- The financing of energy renovation works.
Conditions to be Met:
- The property must become the main residence of the beneficiary or be rented to a third party not part of the tax household for 5 years;
- The works must be eligible for the energy renovation grant provided for in the 2020 Finance Act;
- The funds must be used within six months after the donation.
This measure aims to mobilize private savings to stimulate sustainable real estate investment and facilitate direct line asset transfer.
Conclusion
The 2025 Finance Act is part of a drive towards modernization and tax fairness. Whether through the individualization of withholding tax, minimum taxation of high incomes, or incentive exemptions, these measures will have a concrete impact on taxpayers’ fiscal and asset strategies.
