Income Tax: Reducing withholding tax will be easier in 2023!

Income Tax: Reducing withholding tax will be easier in 2023!

Income tax remains a tax that deducts a portion of salary and income Added to social security contributions. But unlike social security contributions that represent still within 22%Income tax differs on it. Moreover, it appears that a new measure has been proposed to remain consistent with inflation. this way, The tax brackets are larger. But since it is still possible to choose a monthly withholding tax, it is possible To change this amount. And recently, the terms of its amendment seem to be simplified. We will explain everything here.

Inflation and income tax

Thus, income tax is based on income to see how many percentage points the latter will rise. So, if you are in the first tranche, you will have no taxes, for the second tranche, It’s 11%, then 30% and finally 41% and 45%. Thus, you can choose to take a withholding tax. In fact, it is the annual income that determines how many percentage points will be deducted. So, every month, you can decide that we take a sum from you.

Then, around April, you must file your declaration of last year’s income. Then, DGFiP will check to submit your tax notice in August. There is also a window to make changes if needed. In fact, families often forget to record the tax deductions they are entitled to. Once the adjustments are completed, at the end of the year, DGFiP gives the rate to be regulated or not.

In fact, if your income drops during the year, for example, the withholding tax could be very high. And so, at the end of the year, DGFiP gives you back the excess payment. Unlike that, You have not paid the full tax on income. So in this case, you will have three months before the new year to settle the situation. And if the calculations are correct, There may be nothing to give back or give.

adjustable rate

Thus, if in the year you see that you lose income, the withholding tax rate can still be adjusted. But for that, there are conditions. In fact, the change is still greater than 10%. Thus, for the monthly direct debit to change, your income must change 10% less than the minimum, compared to the previous annual income. Therefore, a lot had to be lost. But despite all that, even without losing 10%, even if the excess payment remains at the end of the year, it can be difficult.

In fact, by puncturing a large amount each month, which can not be adjusted, because You haven’t lost enoughThe end of the month can get complicated quickly. Hence he is aware of the problem that this 10% rule tends to be modified. Let the families Stick to as much as possible regarding their income.

new scale

However, if income tax can be a concern in the event of loss of income, in the event of an increase as well. As it was said. There are many tax categories. These segments take into account annual income. But now, with inflation, life has changed. And it costs much more. Almost 8% more for the food sector. But for that, to help the French, the government implemented the law of purchasing power.

In the latter, there are various aids, bonuses, allowances, and above all re-evaluation. So it sounds great for your beneficiaries, but it’s less so when you think about taxes. In fact, with all this extra aid, the annual income changes dramatically. Only, in parentheses for taxes, rates change a lot. For 1 euro you can pass without taxes, in 11%. But also, from 11% to 30%, which is huge. Thus, to earn one euro more, you can pay almost three times more taxes. From 3000 euros to 9000 euros. Change is impossible for many families.

New slides

Thus, the government decided to review the income tax schedule. The ranges and thresholds are wider to avoid these scenarios. Thus, for this year, less than 10,225 euros, there were no taxes. For the next year, it will be less than 10,777 euros. next one, 11% tax between 10226 and 26,070 euro. For the next year, the slide remains between 10,777 euros and 27,478 euros. Then the 30% tax goes from 26,071 euros to 74,545 euros, to 27,478 up to 78,570 euros.

Thus, this change in the tax scale allows many families not to change tax brackets. And the So don’t raise their taxes. Thus, this procedure passes for tax reduction.

Income tax change

Thus, for the remainder of the monthly income tax levy, a reduction of more than 10% was required between the old annual income and the new income. This brings a little flexibility. Concretely, it is therefore necessary that a person who withdraws 500 euros per year goes to 450 euros. But between the two no space. But this could change soon.

Thus, it is the Finance Bill 2023 that the government wishes to change this rule. If the base 10% appears to avoid doubling the number of change requests, then it looks like the metric should drop altogether. And so the government intends Go from 10% to 5%. One way to better adapt income tax to families.

Thus, families will be able to adjust more easily to the monthly levy of this tax in the event of a fall in income. It also explainsThis action will have the effect of broadening the range of taxpayers who can benefitbased on a request for a downward adjustment of the withholding tax rate“.

As for the process, everything happens online. just go toManage my withholding tax” and then “Update after an increase or decrease in your incomeYou will still need some evidence, such as an estimate of your net taxable income.

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