France has approved its 2026 budget after weeks of political uncertainty, securing the survival of Prime Minister Sébastien Lecornu’s minority government and setting out a mix of spending restraint, targeted tax measures for high earners and large companies, and limited relief for households and retirees.
France finally passed its 2026 budget on 3 February 2026 after two no-confidence motions failed, allowing Prime Minister Sebastien Lecornu’s minority government to survive and bringing a measure of political stability.
The prolonged negotiations followed President Emmanuel Macron’s 2024 snap election, which resulted in a hung parliament amid mounting pressure to address strained public finances.
Lecornu said the budget prioritises spending restraint without raising taxes on households or businesses, and that it will be reviewed by the Constitutional Court for compliance.
“France finally has a budget. A budget that embraces clear choices and essential priorities. A budget that reins in public spending, which does not raise taxes for households and businesses,” Lecornu said in a post on X.
The key tax measures are as follows:
Extended rules for high earners
The government will not freeze income tax brackets; instead, it will adjust them for inflation at a rate of 0.9%. Additionally, the differential tax on high incomes (CDHR) has been extended until the national deficit falls below 3% of GDP, while the government has chosen to keep the real estate wealth tax (IFI) unchanged for 2026 rather than introduce a broader wealth tax.
Exceptional tax on large businesses
The exceptional tax on the profits of large companies (CEBGE), which applies to about 300 groups with a turnover of at least EUR 1.5 billion, has been extended into 2026. However, medium-sized businesses will be exempt from this specific tax in 2026. Furthermore, owners of sole proprietorships must now hold onto the assets for six years, up from four, to get the tax advantage.
Business incentives
The budget halves the exceptional contribution to the profits of very large companies. For those with a turnover in France of at least EUR 1 billion, the rate will drop to 10.3% (for those under EUR 3 billion) or 20.6% (for those over EUR 3 billion) for the second fiscal year ending after 31 December 2025.
Additionally, the government is moving forward with the accelerated removal of the CVAE (tax on added value), lowering the maximum rate to 0.19% in 2026 and 0.09% in 2027, before it disappears completely in 2028.
When it comes to multinational taxation, the budget provides refined rules for the 15% global minimum tax (Pillar 2) to align with updated international guidelines.
Parcels, pollution, and the farming industry
- The new measures introduce a EUR 2 tax on small parcels and higher tax stamp fees for residence permits.
- The environmental tax on polluting activities (TGAP) will rise annually until 2030.
- In agriculture, a 7.5% tax credit for equipment cooperatives was confirmed, but planned increases in organic farming credits and changes to tobacco and vaping taxes were dropped.
- The business value-added tax (CVAE) will also remain in force, ending expectations of its gradual phase-out.
Higher taxes for the wealthy, targeted relief for retirees
- The government will extend the exceptional contribution on high earners for another year, applying to incomes above EUR 250,000 (EUR 500,000 for couples) to ensure a minimum effective tax rate of 20%.
- The 2026 budget also introduces a new 2% tax on the financial assets of large holding companies with at least EUR 5 million in assets to discourage tax avoidance through so-called “cash box” structures.
- For retirees, the pension tax allowance will shift from a 10% proportional deduction to a flat allowance of EUR 2,000 per person (EUR 4,000 per couple), benefiting lower pensions while increasing contributions from higher earners.
- The ceiling for the 75% tax reduction on donations to charities supporting the poor will double from EUR 1,000 to EUR 2,000.
Other notable changes for 2026 include:
- VAT thresholds: The standard VAT exemption threshold for small businesses will rise to EUR 37,500 in annual turnover, though it remains at EUR 25,000 for real estate work.
- Property taxes: The integration of updated professional rental values into tax bases has been deferred until 2027, with the changes spread over six years to avoid sudden spikes for owners.
- Stamp duties: Access to the legal system will become more expensive with a new EUR 50 contribution required for most civil and labour court cases.
- Permit fees: Fees for residency permits and nationality applications are increasing, with nationality applications now costing an additional EUR 200 in stamp duty.
- Excise duty on electricity: To protect consumers, the government is lowering the excise tax on electricity by EUR 0.5/MWh in 2026.
Earlier, on 16 January 2026, French Prime Minister Sebastien Lecornu announced changes to the draft 2026 budget, including higher income support benefits for low-income workers, students, and pensioners, in an effort to win backing from the Socialist Party.
