Income tax: how to adjust your withholding tax to avoid a catch-up

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2 min

Nearly 10 million taxpayers will have a balance of income tax to pay to the tax authorities from the end of September. This is due, in particular, to a poorly adjusted withholding tax rate.

Back to school means… tax deadlines. This year, 9.8 million taxpayers owe money to the tax authorities following their income tax return. If this is your case, a direct debit from the Directorate General of Public Finances (DGFIP) will appear on your bank account on September 26 and the operation will be repeated a maximum of three times until December if the amount to be paid exceeds 300 euros. If this tax catch-up can be explained by the end of the benefit of a tax credit or a change in family situation, it could have been avoided with a withholding tax well adjusted to your income.

It is also possible that the tax authorities have automatically updated your withholding tax rate if you have a tax balance to pay. This rate was normally communicated to you at the end of your income tax return last spring and will appear on your next pay slip at the end of September. Be careful, however: if this adjustment is to prevent you from having to pay a new, excessively large tax catch-up next year, the tax authorities have established it based on your income declared in 2023. In other words, the tax authorities do not take into account a recent salary increase or your retirement during 2024. Therefore, if your income has increased or decreased this year, the new withholding tax rate may be under- or over-estimated.

Your new withholding tax rate valid until the end of the year

To remedy this, log in to your personal online space on the website “impots.gouv.fr” then click on the “source deduction” tab. Your family situation and your current rate appear on the screen. Then click on the blue button “update following an increase or decrease in your income”. An online form must be completed in three steps.

The first step is to provide your place of residence, specify whether you are disabled or whether you hold a combatant’s card or a military disability or war victim’s pension. Also indicate whether you have dependents or persons attached to your tax household. Then move on to the second step to provide your income since January 1, 2024 and what you estimate you will receive until December 31, 2024.

The third step of the form finally offers you a new withholding tax rate. If you validate it, it will automatically apply within two months of its transmission to your employer. Please note that this new withholding tax rate, modified at your initiative via your personal online space, will only be valid until December 31, 2024. Without further action on your part, the rate communicated by the tax authorities when you filed your income tax return last spring will apply from January 1, 2025. You will therefore have to repeat this process by then so that your rate adjusted by you is effective again in 2025.