“Puting major pensions in common in common”for François Bayrou. “A measure of social justice”according to the Minister of Economy and Finance, Eric Lombard. To restore public finances, pensioners will be used: the10% reduction on income tax which they benefit should be transformed into a Annual lump sum reduction of 2,000 euros. A mutation that will make losers, but also winners, as explained by a Note from the Public Policy Institute (PPI) Unveiled Tuesday, July 29. As a reminder, like assets, retirees benefit from a tax reduction of 10% on the income they declare to the tax administration. On the revenues of 2024 declared in 2025, the minimum advantage reached 450 euros per member of the tax household and is capped at 4,399 euros for the entire tax household.
But then, what would pass the transition to a lump sum reduction of 2,000 euros per person receiving a retirement pension? Nothing for taxpayers with an annual income of 20,000 euros, according to the author of the IPP study, Sylvain Duchesne. Indeed, whether it is a single person with such a income, or a couple whose total income amounts to 40,000 euros, apply a 10% reduction would amount to subtracting taxable income for 2,000 euros for 20,000 euros in income, or 4,000 euros for a couple with 40,000 euros declared. A tax deduction strictly identical to that obtained for a retiree alone (package of 2,000 euros) or a couple of two retirees (twice the package of 2,000 euros, or 4,000 euros).
Taxpayers alone more punished
Logically, with less than 20,000 euros in income, A bachelor would therefore be a winner Since the fixed reduction of 2,000 euros will exceed that obtained by taking into account 10% of its income. “All tax households which have amounts of pension below this threshold will see their reduction increase (they will therefore have income considered as lower, which open up to pay less taxes and to receive more social benefits), while it will be the opposite for tax households receiving more than 20,000 euros”advance the study. Same observation for a retired couple, each of which receives less than 20,000 euros, the package of 2,000 euros in abatement doubled at 4,000 euros exceeding that obtained by applying a deduction of 10% of income.
Conversely, households affecting income above this threshold would be penalized, and more mainly the single people. The Public Policy Institute takes the example of a single retiree with 50,000 euros in income, which this year benefits a reduction to the ceiling of 4,399 euros and would only have the right to a fixed tax deduction of 2,000 euros. A much lower sanction for a couple, each of which receives 25,000 euros in pension, since this tax household will benefit from a flat -rate reduction doubled to 4,000 euros, against 4,399 euros previously. “The flat -rate reduction is more dependent on the family configuration: it becomes always more advantageous for couples of retirees than for a retired alone with a given total pension, when this was not the case in the 10%version. This effect is particularly visible in the case of the cap, for which a single person who had a reduction of 4,399 euros would drop to 2,000 euros, while a retired couple would drop from 4,399 to 4,000 euros ”confirms the author of the note.
1.5 million winners or only 100,000?
In total, the modification of the reduction would make, according to the PPI simulations, no less than 1.4 million losers, or 8% of retirees. On the winner side, they could be 1.5 million (9% of retirees) … or only 100,000. A large gap which is explained by a unknown underlined by Sylvain Duchesne. Because the tax reduction applied to the income of a taxpayer currently makes it possible to determine the income which serves as the basis of calculation for its Housing aid as well as other social benefits, so many allowances conditioned at a certain level of income.
If the new lump sum reduction continues to be taken into account in this calculation, the reform will then make 1.5 million winners. “On the contrary, an application only to the calculation of income tax would lead to revenue almost twice as large (around one billion euros), for a lesser redistributive effect and a large majority of losers to the reform”signals the author. Or 1.4 million losers, therefore, and only 100,000 winners.
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