What’s Changing for Individuals in the 2025 Budget

The 2025 Finance Act has officially been adopted. Here’s an overview of the key measures that will impact individuals.

Taxes

Income Tax Brackets Adjusted for Inflation

To offset the effects of inflation, each income tax bracket has been increased by 1.8%. The new brackets for 2025 are as follows:

New Temporary Contribution for High Incomes

A new one-year measure introduces a “differential contribution” for top earners. Individuals earning over €250,000 per year (or €500,000 for couples) and currently taxed at a rate below 20% will now be taxed at a minimum of 20%.

Extended Tax Break for Charitable Donations

The so-called “Coluche” tax relief, offering a 75% deduction on donations to charities assisting vulnerable individuals, will continue. It has also been expanded to cover donations to organizations fighting domestic and gender-based violence.

Learn more about charitable donation deductions

Real Estate

Expanded Zero-Interest Loan (PTZ)

The zero-interest loan (PTZ), which supports homeownership under certain income conditions, is now available for all new housing across the country between April 1, 2025, and December 31, 2027.

More on PTZ eligibility

Tax Reform for Non-Professional Furnished Rentals

Capital gains tax for non-professional furnished rental properties (LMNP) has been revised. The amortization previously deducted from rental income will now be factored back into the calculation of capital gains at sale.

This change does not apply to student residences, senior homes, or housing for people with disabilities.

Property owners still benefit from capital gains tax exemptions:

• After 22 years of ownership (income tax)

• After 30 years (social contributions)

“Loc’Avantages” Scheme Extended

Initially scheduled to end in 2024, the “Loc’Avantages” program has been extended until 2027. Landlords renting below-market housing to modest-income tenants may qualify for a tax reduction if they sign a contract with the national housing agency (Anah).

More on Loc’Avantages

Property Transfer Tax Increase

Local authorities may now increase property transfer taxes by 0.5% starting April 1. These taxes, which vary based on the property’s value, are now capped at 5%. First-time buyers will be exempt from this increase.

Inheritance & Donations

Tax Exemption for Family Gifts Toward New Homes

Monetary gifts made within families (from parents, grandparents, etc.) will be exempt from transfer duties if used to buy a new home or one under construction, or for energy renovations—provided the property becomes the primary residence.

Exemption limits:

• Up to €100,000 per donor

• Up to €300,000 per recipient

• Property must be held for at least 5 years

Energy

Changes to the Energy Check Program

Article 173 of the budget law outlines updates to the energy voucher system. Vouchers are distributed by the Agency for Services and Payments (ASP), based on data from tax records, electricity providers, and network managers.

The amount depends on household income and family size.

More on the energy check

End of Reduced VAT Rates on Gas Boilers

Reduced VAT rates (5.5% or 10%) for purchasing and installing gas boilers are abolished. From now on, a 20% VATapplies to align with EU regulations.

Maintenance and repair services for existing boilers remain eligible for reduced rates.

VAT Increase on Gas and Electricity Subscriptions

From summer 2025, VAT on gas and electricity subscriptions will increase to 20%, also in line with EU standards.

More on subscription changes

Transportation

Higher Penalties for Polluting Vehicles

The automotive CO₂ penalty (malus) is being raised gradually from 2025 to 2027.

• In 2025, the penalty begins at 113g/km of CO₂ emissions with a fee of €50.

• The penalty increases progressively up to €70,000 for emissions over 192g/km.

Weight-based penalties will increase in 2026:

• Starting at 1.5 tons: €10/kg for the first 100kg

• Then €5/kg every 100kg

• Capped at €30/kg for vehicles over 2 tons

Electric vehicles will lose full exemption from the weight tax starting July 1, 2026, but will benefit from a 600kg reduction.

Increased Air Travel Solidarity Tax

Effective March 1, 2025, the solidarity tax on airline tickets will increase. Rates depend on destination and class of travel: