Budget 2026 in France

Updated: September 16, 2026 – France Finance Law 2026 and the main tax changes for individuals and businesses

The Finance Law for 2026 (Loi de finances pour 2026) was promulgated on February 19, 2026, bringing several important changes to French taxation. Unlike the draft measures debated during the parliamentary process, the final law contains a more limited package of tax reforms affecting individuals, family wealth transfers, large companies, investment structures and housing.

Several measures that attracted considerable attention during the parliamentary debates were ultimately rejected or removed from the final text. This distinction is essential when assessing how French tax rules actually apply in 2026.

The 2026 reforms include the indexation of the income-tax scale, the extension of the contribution différentielle sur les hauts revenus, changes to the Dutreil business-transfer regime, a new tax targeting certain assets held by patrimonial holding companies, and a higher temporary contribution on the largest companies. At the same time, several proposed tax increases on households were abandoned.

1. The 2026 Income Tax Scale Is Indexed to Inflation

One of the most important changes for individual taxpayers is the revaluation of the French income-tax brackets.

The 2026 scale, applicable to income received in 2025 and declared in 2026, was increased by 0.9%, corresponding to inflation. This avoids mechanically increasing taxpayers’ tax burden solely because nominal incomes have risen with prices.

Taxable income per tax share	Marginal rate
Up to €11,600	0%
€11,601 to €29,579	11%
€29,580 to €84,577	30%
€84,578 to €181,917	41%
Above €181,917	45%

The tax remains progressive: reaching a higher bracket does not mean that the entire income is taxed at that higher rate.

The family quotient, tax credits, reductions and other mechanisms can also significantly affect the final amount payable.

2. The High-Income Minimum Tax Is Extended

The contribution différentielle sur les hauts revenus (CDHR), introduced in 2025, is maintained for 2026.

It is designed to ensure a minimum overall income-tax rate of 20% for certain high-income households.

For 2026, it concerns households whose revenu fiscal de référence for 2025 exceeds:

€250,000 for a single taxpayer
€500,000 for a married or PACS couple

The measure remains applicable until the public deficit falls below 3% of GDP, according to the law.

This should not be confused with the ordinary progressive income-tax scale or with the Impôt sur la fortune immobilière (IFI).

3. The Dutreil Pact Is Tightened

The Pacte Dutreil, which can provide a 75% exemption from inheritance and gift tax on qualifying business transfers, has been modified.

The 2026 law excludes from the preferential treatment certain assets that are not exclusively allocated to the company’s qualifying professional activity. The measure particularly targets certain so-called luxury or non-operational assets, including certain:

yachts and pleasure boats;
aircraft;
non-professional tourism vehicles;
jewellery and precious metals;
works of art, collections and antiques in the situations covered by the law;
race or competition horses;
wines and alcoholic beverages;
residential properties and residences not allocated to the professional activity.

The reform also extends the individual holding commitment from four years to six years.

This does not mean that every non-operational asset held by a family business automatically eliminates the Dutreil benefit. The legislation contains specific categories and conditions, so the composition and use of the company’s assets must be examined carefully.

4. The Proposed Taxation of Long-Term Illness Benefits Was Not Retained

During the preparation of the 2026 budget, the government proposed changing the tax treatment of daily allowances received by people suffering from a long-term condition.

The proposal generated substantial debate during the parliamentary process.

However, the final Finance Law did not introduce the broad taxation described in the original draft article. Consequently, it would be inaccurate to state that the 2026 Finance Law introduced a new tax on all long-term sick-leave benefits.

This is an important example of why draft Finance Bill measures should not be presented as final tax rules.

5. A New Inheritance Tax Allowance for Certain Stepchildren

The 2026 reforms introduced a new allowance for certain transfers between a person and the child of their spouse or PACS partner.

The allowance is €15,932, compared with the previous general allowance of €1,594 applicable in this type of relationship.

However, the increased allowance does not turn the stepchild into a child for inheritance-tax purposes. The tax treatment of the amount exceeding the allowance can remain substantially less favourable than the treatment applicable to a biological or legally adopted child.

For blended families, estate planning therefore remains particularly important.

6. The IFI Was Not Replaced by a General Wealth Tax on Luxury Assets

One of the most significant corrections to the original article concerns the Impôt sur la fortune immobilière (IFI).

The final Finance Law did not transform the IFI into a general wealth tax covering luxury goods, cryptocurrencies, financial investments and life-insurance assets.

The IFI remains principally a tax on net taxable real-estate wealth, with the €1.3 million threshold continuing to apply.

However, the 2026 law introduced another measure targeting certain patrimonial holding companies. This is a separate tax and should not be confused with the IFI.

7. A New Tax Targets Certain Patrimonial Holding Companies

The Finance Law 2026 created a specific tax on certain assets held by patrimonial holding companies.

The final mechanism is considerably narrower than some of the proposals discussed during the parliamentary debates.

The measure concerns companies meeting several conditions, including a minimum overall asset value and significant ownership or control by individuals, together with a substantial proportion of passive income.

The tax focuses on specified non-professional or luxury assets rather than applying indiscriminately to all financial wealth.

Bercy explains that assets such as certain yachts, vehicles, racehorses and jewellery may fall within the mechanism, while cash, financial securities, active participations and works of art are excluded from the taxable base under the conditions specified by the law. The applicable rate is 20% for relevant financial years closing from December 31, 2026.

This new regime can therefore be highly relevant for owners of French or international family holding structures.

8. The Tax on Share Buybacks Did Not Rise to 33%

A proposal to increase the tax on certain share buybacks from 8% to 33% was discussed during the parliamentary examination of the 2026 budget.

However, the 33% proposal was not retained in the final legislation.

The tax created by the 2025 Finance Law therefore remains applicable in 2026 to qualifying French companies carrying out taxable capital reductions resulting from the cancellation of previously repurchased shares.

The current tax rate remains 8%, and the regime generally targets companies whose turnover exceeds €1 billion, subject to the detailed statutory conditions.

The distinction between a proposal and the final law is particularly important here because the 33% figure circulated widely during the parliamentary debates.

9. The French 15% Global Minimum Tax Remains Relevant for Large Groups

France continues to apply the OECD Pillar Two global minimum taxation rules.

The French system provides for a minimum effective tax level of 15% for qualifying multinational groups and large domestic groups.

The principal threshold is €750 million of consolidated group turnover, generally measured over at least two of the four preceding financial years.

This is different from saying that every multinational company operating in France automatically pays a 15% corporate tax rate.

The Pillar Two system calculates an effective tax rate and can impose a top-up tax where the applicable effective rate is below the minimum level.

10. Large Companies Face a Renewed Exceptional Contribution

The 2026 Finance Law also maintains an exceptional contribution on the profits of the largest companies.

For 2026, the measure is focused on companies with turnover exceeding €1.5 billion, rather than the €1 billion threshold applicable under the previous year’s mechanism.

The rates are:

20.60% for companies with turnover between €1.5 billion and €3 billion;
41.20% for companies with turnover above €3 billion.

The contribution is calculated using the average corporate income tax due for the relevant years according to the statutory mechanism.

This is an exceptional contribution applied in addition to the ordinary corporate-tax system; it does not mean that the French corporate tax rate itself has simply increased to these percentages.

11. The Proposed €4,000 Child-Support Exemption Was Not Adopted

One proposal during the parliamentary debate sought to change the tax treatment of child-support payments (pensions alimentaires).

The proposal would have exempted amounts received for a minor child up to €4,000 per child, capped at €12,000 per year, while changing the deduction available to the paying parent.

This measure should not be presented as a general tax rule created by the final Finance Law 2026.

The rules applicable to child-support payments therefore need to be distinguished from proposals that were discussed or voted on during earlier stages of the budget process.

12. The €7,500 Overtime Exemption Was Not Removed

The original article stated that all overtime would become completely tax-free and that the €7,500 annual limit would disappear.

That is not the final 2026 rule.

The existing income-tax exemption for overtime and certain additional hours remains subject to an annual limit of €7,500.

Several amendments proposed increasing or removing this ceiling during the Finance Bill debate, but these proposals should not be confused with the final law.

Employees should therefore continue to check the amount of overtime exemption appearing on their tax documents rather than assuming that unlimited overtime is tax-free.

13. EHPAD Expenses Remain a Tax Reduction, Not a Refundable Credit

Another proposal concerned expenses paid for accommodation in an EHPAD.

The idea was to transform the existing tax reduction into a refundable tax credit, which would have allowed certain taxpayers with little or no income tax to receive a payment from the tax authorities.

This reform was not retained in the final 2026 budget.

The existing mechanism therefore remains a tax reduction, subject to its normal conditions and limits. A tax reduction is fundamentally different from a refundable tax credit: if the taxpayer has insufficient tax to absorb a reduction, the unused amount is generally not paid back as a cash refund.

14. The Journalists’ €7,650 Allowance Was Not Restricted to €75,676

During the parliamentary debate, an amendment proposed limiting the journalists’ professional-expense allowance to taxpayers earning below approximately €75,676, corresponding to 3.5 times the annual gross minimum wage used for the proposal.

The existing allowance is €7,650 under the applicable conditions.

Although the amendment was adopted at one stage of the Assembly’s examination, the restriction was ultimately not retained in the final Finance Law 2026.

The original article therefore incorrectly presented a parliamentary amendment as a final rule.

15. Fast-Fashion Tax Measures: The Rules Need to Be Distinguished

Fast-fashion taxation was another subject of parliamentary debate.

The 2026 legislative developments concerning ultra-fast fashion include measures relating to environmental obligations, advertising and promotion, with additional rules applying from 2027.

The final framework should not be described simply as a blanket abolition of Article 238 bis tax benefits for named companies such as Shein or Temu.

Separate environmental legislation adopted in July 2026 also introduced restrictions affecting ultra-fast-fashion operators, including future advertising rules.

Businesses affected by these rules should therefore distinguish between:

corporate tax rules;
charitable-donation tax reductions;
environmental obligations;
advertising restrictions;
and the specific legal definition of ultra-fast fashion.

16. The High-Income Contribution Continues Until the Statutory Condition Is Met

The 2026 Finance Law maintains the 20% minimum taxation mechanism for certain high-income households.

As noted above, the CDHR applies to taxpayers exceeding the relevant income thresholds and is designed to remain in force until the statutory public-deficit condition is satisfied.

For international taxpayers and executives with significant remuneration, dividends, capital gains or other income, the calculation can be more complex than simply applying a 20% rate to total income.

17. Corporate Tax Has Not Been Increased by a General €6 Billion Profit-Tax Measure

The original article suggested that corporate profit taxation had been increased by €6 billion rather than €4 billion.

This description does not accurately reflect the final structure of the 2026 Finance Law.

The principal large-company measure is the renewed exceptional contribution on the profits of very large companies, with the turnover thresholds and rates described above.

The ordinary French corporate income-tax rate should therefore not be described as having been generally increased for all companies.

18. The French Digital Services Tax Remains at 3%

The proposal to double France’s digital services tax (taxe sur les services numériques) from 3% to 6% was debated during the 2026 budget process.

However, the 6% rate was proposed through amendments and was not incorporated into the final Finance Law.

The French digital services tax therefore remains based on the existing 3% rate, subject to its specific scope and thresholds.

The measure should consequently not be presented as a final “doubling of the GAFAM tax” in 2026.

19. The Proposed Wealth Tax on €100 Million Fortunes Was Rejected

The so-called Zucman tax attracted considerable attention during the 2026 budget debate.

The proposal sought to establish a minimum annual tax of 2% on net wealth above €100 million for the largest fortunes.

The proposal was not included in the final Finance Law for 2026.

It is therefore incorrect to state that France introduced a general 2% annual wealth tax on fortunes above €100 million in 2026.

The reform actually enacted by Parliament concerning patrimonial holding companies is a separate mechanism with a substantially narrower scope.

20. The 22-Year Property Capital-Gains Rule Remains

An amendment debated during the budget process proposed reducing the period required for full income-tax exemption on real-estate capital gains from 22 years to 17 years.

This proposal was not retained in the final Finance Law.

The general rule therefore remains that the income-tax component of a taxable French real-estate capital gain is fully eliminated after 22 years of ownership, while social-contribution exemption is generally reached after 30 years.

This distinction is particularly important for owners of second homes and investment properties.

What About the Exit Tax?

The original article also stated that the French exit tax had been reinstated.

This is misleading.

France already has an exit-tax regime applicable in certain circumstances when a French tax resident transfers their tax residence outside France. The existence of an exit-tax filing procedure remains confirmed by the French administration.

The 2026 Finance Law should therefore not be presented as simply “reinstating” an exit tax that had disappeared.

For shareholders relocating internationally, the actual issue is whether the taxpayer meets the statutory conditions for the exit-tax regime and whether a deferral or subsequent relief applies.

What Taxpayers and Businesses Should Watch in 2026

The final Finance Law 2026 is more nuanced than the collection of measures initially discussed during parliamentary debates.

For individuals, the most relevant issues include:

the 0.9% indexation of the income-tax scale;
continuation of the 20% minimum-tax mechanism for certain high-income households;
changes affecting certain inheritance transfers to stepchildren;
the existing IFI regime;
the new tax affecting certain patrimonial holding companies;
the continued €7,500 overtime exemption ceiling;
the continued tax reduction for qualifying EHPAD expenses;
and the ordinary rules governing real-estate capital gains.

For companies, attention should particularly be paid to:

the reform of the Pacte Dutreil;
the exceptional contribution applicable to very large companies;
the 15% global minimum tax under Pillar Two;
the 8% tax on qualifying share-cancellation capital reductions;
and the continuing transition of several corporate taxes and incentives.

France Tax Planning in 2026: Why the Details Matter

The 2026 budget illustrates an important point about French taxation: a measure can be adopted during a parliamentary debate and still disappear before the final legislation is enacted.

This is particularly relevant for international taxpayers, entrepreneurs, family businesses and investors, because relying on an early version of a Finance Bill can lead to incorrect tax planning.

For example, the 2026 process saw proposals concerning:

a 17-year property capital-gains exemption;
unlimited overtime tax exemption;
a 33% share-buyback tax;
a 6% digital services tax;
a 2% minimum wealth tax above €100 million;
changes to child-support taxation;
and restrictions on journalists’ allowances.

Several of these measures were debated or temporarily adopted at different stages but were not included in the final law.

The final tax position must therefore always be checked against the enacted legislation and the rules applicable to the relevant taxpayer.

Conclusion: What the 2026 Finance Law Really Changes

The French Finance Law 2026 introduces a series of targeted tax changes rather than the sweeping tax overhaul suggested by some early parliamentary proposals.

The most significant confirmed measures include the 0.9% indexation of the income-tax scale, the continuation of the 20% high-income minimum contribution, the tightening of the Pacte Dutreil, the creation of a targeted tax on certain patrimonial holding companies, and the renewed exceptional contribution affecting France’s largest companies.

At the same time, several highly publicised proposals were ultimately rejected or abandoned, including the 2% Zucman wealth tax, the 6% digital services tax, the 33% share-buyback tax, the 17-year real-estate exemption proposal and the removal of the €7,500 overtime ceiling.

For international founders, business owners, executives, investors and expatriates, the practical impact depends heavily on tax residence, income structure, company structure, investments, real estate holdings and international connections.

ESCEC International can help you assess how the 2026 French tax rules may affect your personal or business situation and identify the appropriate accounting, tax and compliance approach.

FAQ – France Finance Law 2026

What is the Finance Law 2026 in France?

The Finance Law for 2026 is the French annual budget law, promulgated on February 19, 2026. It introduces several tax changes affecting individuals, businesses, family wealth transfers, investment structures and large companies.

What are the main tax changes in France in 2026?

The main confirmed measures include the 0.9% indexation of the income-tax scale, the continuation of the 20% minimum-tax mechanism for certain high-income households, changes to the Dutreil regime, a new tax targeting certain patrimonial holding companies and an exceptional contribution affecting very large companies.

What are the French income-tax brackets for 2026?

For income received in 2025 and declared in 2026, the tax brackets per tax share are:

Up to €11,600: 0%
€11,601 to €29,579: 11%
€29,580 to €84,577: 30%
€84,578 to €181,917: 41%
Above €181,917: 45%

The tax remains progressive, meaning that reaching a higher bracket does not make the entire income taxable at that rate.

Why was the French income-tax scale increased in 2026?

The 2026 income-tax scale was indexed by 0.9% to reflect inflation. The purpose is to avoid mechanically increasing taxation solely because nominal incomes have increased with prices.

Is the 20% minimum tax for high-income households still applicable in 2026?

Yes. The contribution différentielle sur les hauts revenus (CDHR) continues in 2026. It is designed to ensure a minimum overall income-tax rate of 20% for certain high-income households.

What income thresholds apply to the high-income minimum contribution in 2026?

For 2026, the mechanism concerns households whose 2025 revenu fiscal de référence exceeds €250,000 for a single taxpayer or €500,000 for a married or PACS couple, subject to the detailed rules.

Has France introduced a new general wealth tax on luxury assets in 2026?

No. The Finance Law 2026 did not replace the IFI with a general wealth tax covering luxury goods, cryptocurrencies, financial investments and life-insurance assets. The IFI remains principally a tax on net taxable real-estate wealth, with the €1.3 million threshold continuing to apply.

What is the new tax on patrimonial holding companies?

The 2026 Finance Law introduced a specific tax targeting certain assets held by qualifying patrimonial holding companies. The mechanism applies under specific conditions concerning the company’s assets, ownership or control and passive income.

Which assets can be targeted by the new patrimonial holding company tax?

Under the conditions specified by the law, certain yachts, vehicles, racehorses and jewellery may be concerned. Cash, financial securities, active participations and works of art are excluded from the taxable base under the conditions described in the article.

What is the rate of the new patrimonial holding company tax?

The applicable rate is 20% for relevant financial years closing from December 31, 2026, subject to the statutory conditions.

What changes does the 2026 Finance Law make to the Dutreil Pact?

The reform tightens the preferential Dutreil regime by excluding certain assets that are not exclusively allocated to the company’s qualifying professional activity. It also extends the individual holding commitment from four years to six years.

Does every non-operational asset cancel the Dutreil benefit?

No. The rules contain specific categories and conditions. The presence of a non-operational asset does not automatically eliminate the Dutreil benefit; the company’s assets and their use must be examined under the applicable legislation.

What is the new inheritance-tax allowance for certain stepchildren?

The 2026 reforms introduced a €15,932 allowance for certain transfers between a person and the child of their spouse or PACS partner. This does not give the stepchild the same inheritance-tax status as a biological or legally adopted child.

Has France taxed long-term sick-leave benefits under the 2026 Finance Law?

The final Finance Law did not introduce the broad taxation of long-term sick-leave daily allowances that had been proposed during the parliamentary process. Draft measures should therefore be distinguished from the final legislation.

Has the tax on share buybacks increased to 33% in 2026?

No. The proposed increase from 8% to 33% was not retained in the final Finance Law. The applicable tax remains 8% for qualifying capital reductions resulting from the cancellation of previously repurchased shares, subject to the statutory conditions.

What companies are concerned by the share-buyback tax?

The regime generally targets French companies whose turnover exceeds €1 billion and that carry out qualifying taxable capital reductions resulting from the cancellation of repurchased shares.

Does France apply the OECD 15% global minimum tax in 2026?

Yes. France continues to apply the Pillar Two global minimum taxation rules. They concern qualifying multinational and large domestic groups meeting the €750 million consolidated turnover threshold under the applicable rules.

Does Pillar Two mean that every multinational company in France pays 15% corporate tax?

No. The 15% figure refers to a minimum effective tax level for qualifying groups. A top-up tax may apply where the effective tax rate calculated under the Pillar Two rules is below the minimum.

What exceptional contribution applies to very large companies in 2026?

The 2026 Finance Law maintains an exceptional contribution on the profits of very large companies. It applies to companies with turnover exceeding €1.5 billion under the statutory conditions.

What are the rates of the exceptional contribution for large companies?

The rates are 20.60% for companies with turnover between €1.5 billion and €3 billion, and 41.20% for companies with turnover above €3 billion. These are rates of the exceptional contribution mechanism, not the ordinary corporate income-tax rate.

Has the €7,500 overtime tax exemption been removed?

No. The existing income-tax exemption for overtime and certain additional hours remains subject to an annual limit of €7,500. Proposals to increase or remove this ceiling were not retained in the final law.

Has the EHPAD tax reduction become a refundable tax credit in 2026?

No. The proposed reform was not retained. Qualifying EHPAD expenses continue to benefit from a tax reduction under the existing conditions rather than a refundable tax credit.

Has the journalists’ €7,650 allowance been restricted in 2026?

The proposed restriction based on an income threshold of approximately €75,676 was not retained in the final Finance Law. The €7,650 allowance remains applicable under its existing conditions.

Has France increased the digital services tax from 3% to 6%?

No. The proposal to double the French digital services tax from 3% to 6% was not incorporated into the final Finance Law. The existing 3% rate remains applicable subject to the tax’s scope and thresholds.

Did France introduce the 2% Zucman wealth tax in 2026?

No. The proposal for a minimum annual tax of 2% on net wealth above €100 million was not included in the final Finance Law 2026. It should not be confused with the separate tax targeting certain patrimonial holding companies.

Has the French real-estate capital-gains exemption period been reduced from 22 to 17 years?

No. The proposal to reduce the full income-tax exemption period from 22 years to 17 years was not retained. The general rule described in the article remains 22 years for the income-tax component and generally 30 years for social-contribution exemption.

Was the French exit tax reinstated by the Finance Law 2026?

The article explains that describing the 2026 Finance Law as simply “reinstating” the exit tax is misleading. France already has an exit-tax regime applying in certain circumstances when a French tax resident transfers their tax residence abroad.

Why is it important to distinguish proposed tax measures from the final Finance Law?

A measure discussed, amended or even temporarily adopted during the parliamentary process can still be removed before the final legislation is enacted. Tax planning should therefore be based on the final applicable rules rather than on early versions of a Finance Bill.

What should individuals and businesses watch in France in 2026?

Individuals should particularly monitor the indexed income-tax scale, the high-income minimum contribution, inheritance-tax changes, the IFI, the new patrimonial holding company tax, overtime rules, EHPAD tax treatment and real-estate capital gains. Businesses should pay particular attention to Dutreil, large-company contributions, Pillar Two and the tax on qualifying share cancellations.