Finance law 2025: key measures

Adopted on February 14, 2025, the Finance Law aims to strengthen France’s sovereignty and credibility. It initiates the recovery of public finances to bring the deficit below 3% by 2029. In 2025, the state budget deficit will be €139 billion, improving by €7.9 billion compared to 2024, with the public deficit reduced to 5.4% of GDP.

This article outlines the key measures of the law.

Tax scale adjustment

The income tax brackets for 2024 will be increased by 1.8% to account for inflation. Similarly, the withholding tax scale will be indexed to inflation starting in January 2025.

The new tax brackets:

• Up to €11,497: 0% tax rate
• €11,520 to €29,315: 11% tax rate
• €29,373 to €83,823: 30% tax rate
• €83,988 to €180,294: 41% tax rate
• Above €180,294: 45% tax rate

Environmental measures

• The eco-tax (CO2 and weight-based penalties) on polluting vehicles is reinforced.
• The reduced VAT rate for the purchase and installation of gas boilers is abolished.
• The solidarity tax on airline tickets (“Chirac tax”) is increased, though less than initially planned. From March 1, 2025, the fee for economy-class flights within France or Europe will rise to €7.40 (from €2.63 today).

Read more: Green finance: a key driver of ecological transition

Housing access measures

• The zero-interest loan (PTZ) is reinstated nationwide for purchasing new homes, either individual or collective, until the end of 2027.
• Monetary gifts within families for buying, constructing, or renovating a home will be exempt from gift tax until the end of 2026. The recipient must use the funds within six months and keep the property as a primary residence or rent it out for at least five years.
• The “Loc’Avantages” program (formerly “Louer Abordable”), which grants landlords a tax reduction based on rent levels, is extended until 2027.
• The taxation of furnished rental properties changes: depreciation deductions that were previously excluded from capital gains calculations will now be reintegrated when the property is sold. This applies to sales occurring after the law’s enactment.
• The housing tax is now focused solely on secondary residences, exempting emergency shelters and other specific properties.

High-income surcharge

A new contribution ensures a minimum 20% tax rate for top earners. It applies to French tax residents with a reference taxable income exceeding:

• €250,000 for individuals
• €500,000 for couples

Certain exceptional incomes are partially included. The measure is limited to one year (instead of the initially planned three years) and is expected to generate €2 billion in revenue.

If total paid taxes already reach 20% of income, the contribution does not apply. A smoothing mechanism is provided for adjusted incomes below:

• €330,000 for individuals
• €660,000 for couples

This contribution applies to 2025 incomes, with a 95% advance payment due in December 2025.

Taxation of “management packages”

The taxation of gains from “management packages” is revised. A portion of the gain will be taxed as capital gains (maximum 34%), and the rest as salary income (maximum 59%), based on a financial performance ratio. An additional 10% employee contribution applies to sales completed between the law’s enactment and December 31, 2027.

BSPCE stock option scheme changes

Starting January 1, 2025, shares acquired through BSPCE stock options can no longer be placed in a PEA (equity savings plan). Instead:

• The exercise gain will be treated as salary income with a flat tax.
• The capital gain on sale will be taxed under capital gains rules, benefiting from deferred taxation.

Corporate tax measures

• A temporary surtax will apply to companies with revenue exceeding €1 billion in France, expected to generate €8 billion.
• Corporate tax (IS) will be increased by a 41.2% surtax for companies with revenue over €3 billion, raising the maximum corporate tax rate to 35.3%.
• The financial transaction tax (TTF) rate will increase from 0.3% to 0.4%, generating an additional €500 million.
• A new tax targets companies frequently using share buybacks followed by cancellation, applying to those with revenue above €1 billion for operations between March 2024 and February 2025.
• EDF, now 100% state-owned, will be required to pay a €2 billion exceptional dividend starting in 2026 under the post-Arenh scheme.

These measures reflect the government’s ambition to strengthen public finances while ensuring social and environmental responsibility.