Income Tax: Lowering your withholding tax in 2023 just got easier!


Income tax remains a tax that deducts a portion of wages and income that added to social security contributions. But unlike social security contributions, which represent still within 22%income tax changes it. Moreover, it seemed that the new scale was proposed to stay in line with inflation. Therefore, more tax categories. But since the monthly withholding tax can still be chosen, it is possible vary this amount. And the conditions for its modification seem to have been simplified recently. We’ll explain everything here.

Inflation and income tax

So income tax is based on income to know how much percentage it will grow. Therefore, if you participate in the first tranche, you will not have any taxes, for the second, it is 11%, then 30% and finally 41% and 45%. So you can choose to withhold tax. Indeed, your annual income determines how much interest you will deduct. So every month you can decide that we charge you an amount.

Then, around April, you have to file your income tax return for the previous year. DGFiP will then check to send you a tax notice in August. There is also a window to make changes if necessary. Indeed, it is very common for households to forget to report the tax deductions to which they are entitled. Once the modifications are complete, at the end of the year, DGFiP gives the rate to be regulated or not.

Indeed, if your income has decreased, for example, during the year, then the tax withheld may therefore be too high. Thus, at the end of the year, the State Federal Tax Service returns the overpayment to you. otherwise, you have not paid the full tax by income. So, in this case, you’ll have three months before the new year to tidy up. And if the calculations are correct, there may also be nothing to return or give.

Adjustable rate

Therefore, if you see a loss of income during the year, it is still possible to change the rate of tax withheld. But there are conditions for this. in fact, change remains more than 10%. So for your monthly direct debit to change, your income must 10% below the minimum, to the year compared to the previous annual profit. So, a lot had to be lost. But at the same time, even without losing 10%, even if the overpayment remains returned at the end of the year, it can be difficult.

Indeed, punching a large amount every month, and which cannot be changed because you haven’t lost enough, then the end of the month can quickly become difficult. After realizing this problem, this 10% rule tends to be modified. allowing households follow as best as possible in relation to their income.

A new scale

However, while income tax can be a concern in the event of a loss of income, so too in the event of an increase. As was said. There are several tax categories. These tranches take into account the annual income. But now, with inflation, life has changed. And it costs much more. Almost 8 percent more in the food sector. But to help the French, the government passed the purchasing power law.

The latter has a lot of benefits, bonuses, allowances and, above all, revaluations. So it sounds great for the beneficiaries, but less so when you think about taxes. Indeed, with all these additional allowances, the annual income varies greatly. Only between tax groups do the rates vary greatly. For one euro more, you can travel without taxes, by 11%. But also from 11% to 30%, which is huge. Therefore, for the fact that you earned one euro more, you could pay almost three times more tax. From €3,000 to €9,000. Impossible change for many households.

New pieces

Therefore, the government has decided to revise the income tax scale. Bands and thresholds are wider to avoid such scenarios. Therefore, there were no taxes for this year below 10,225 euros. Next year it will be less than €10,777. Next, tax at the rate of 11% – from 10,226 to 26,070 euros euro. For the next year, the tranche remains between €10,777 and €27,478. The 30% tax then increases from €26,071 to €74,545, from €27,478 to €78,570.

This change in the tax scale therefore allows many households not to change tax brackets. I so don’t raise their taxes. Therefore, this measure is for tax reduction.

Income tax change

Therefore, a drop of more than 10% was required between the old annual income and the new one for what would be left of the monthly income tax collection. And it brings very little flexibility. In concrete terms, it is then necessary for a person who withdraws 500 euros per year to reach 450 euros. But between the two there is no freedom of action. But that could change very quickly.

So the government wants this rule changed in the 2023 Finance Bill. If it seemed like the top 10% were avoiding multiplying change requests, it looks like that rate should drop anyway. This is what the government thinks go from 10% to 5%. One way is to better tailor the income tax to households.

Thus, households will be able to more easily adapt the monthly collection of this tax in case of a drop in income. He also explains “This measure will expand the range of taxpayers who can benefitupon request, modulation towards a reduction in the withholding tax rate“.

For the process, everything happens online. Just go to “Manage my withholding tax“then”Upgrade after your income increases or decreases“. You will still need some proof, such as a net estimate of taxable income.

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