Why up to 200,000 households in France risk paying tax – or paying more – in 2026

Up to 200,000 households could see themselves paying income tax next year, or see their income tax bill increase, after France failed to pass its main 2026 budget on time for the second consecutive year.

A special law is being passed to allow taxes and spending to remain at 2025 levels, preventing a total shutdown of state services, however any new spending or taxation elements will have to come in the form of a revised and whittled-down 2026 budget.

This will be debated, and once agreed upon, passed at the start of next year. However it will be significantly smaller than a full budget as several measures that would have applied from January 1, 2026, must be removed. 

One element that is usually part of the annual budget is a re-evaluation of income tax brackets, linked to inflation across the previous year. 

The increase means that those who have not seen their financial situation change (or who have seen income increase in line only with annual inflation) should remain in the same tax bracket. 

The absence of this increase however would keep tax brackets at 2025 levels, squeezing households who have seen income rise through inflation. 

Specialists estimate up to 200,000 households would see themselves either enter the first income tax bracket, or see a portion of their income hit a higher bracket.

Note that despite the lack of a main budget, the 2026 Social Security budget was definitively passed and will come into force from January 1, 2026. It focuses only on spending and revenues in areas such as healthcare and benefits.

Tax brackets could be re-evaluated

A similar situation took place last year, which also saw emergency laws used in the absence of a full budget, and the risk of tax brackets being frozen at 2024 levels.

However, the watered-down budget passed by MPs in February – prior to spring income tax declarations – manually increased brackets in line with 2024 inflation. 

It is possible that MPs include a similar manual increase in a future 2026 budget, and providing it is passed in time will see households largely remain in the same bracket as this year, unless their financial situation changed in 2025. 

However, the inclusion of this in the revised budget is less certain than last year as the draft 2026 budget originally planned to freeze income tax brackets at 2025 levels as part of a wider freeze on government spending.

This was rejected by MPs, who wanted to maintain the inflation-based increase, and it is unclear if either side will change their stance when attempting to pass a budget next year.

What else is the lack of a 2026 budget impacting?

There are several other issues caused by a lack of annual budget. 

The MaPrimeRénov’ eco-renovation aid service will be closed from January 1, as a lack of budget means the service is unclear on allocated funds. 

Claims for work set to start in the year and already accepted will be paid out, but new applications will not be reviewed until the future of the scheme is clearer. 

Taxes on small parcels remain unclear. An EU-wide €3 tax will come into force from July 2026, however a separate tax of €2 – then increased to €5 by senators – was included in the budget. 

This will not be introduced at the start of 2026, but may be included as part of the watered-down budget implemented later in the year, if MPs, senators, and the government can agree on an amount. 

The 10% tax allowance for retirees during spring declarations remains unchanged. The government wanted to replace this with a flat €2,000 tax-reduction – that would see older residents with lower incomes pay less tax, but those on higher incomes pay more – but MPs rejected the measure. 

It cannot be included at all in the revised 2026 budget as it was dependent on being passed in 2025. A revision of the rules may be included in the 2027 budget. 

Plans to tackle a young teacher shortage through a direct university - school scheme have been postponed. The scheme sees students able to take teaching exams directly after their bachelor’s degree, and then undertake a paid two-year training scheme before becoming teachers. 

More than 250,000 students have registered to take the teacher training exams in 2026, but it is unclear if they will be offered.

Likewise, plans to hire more than 1,600 staff in the ‘justice sector’ (judges, court clerks, prison officers) will be cancelled as funding for the roles was included in the budget.

Part of a €130 million aid package for struggling winegrowers should remain available, but certain elements such as a dedicated help centre for winegrowers are at risk as these funds were included as part of the budget.

All expenses related to the vaccination, slaughter (and subsequent allowances for), and care of cows with lumpy skin disease will be covered by the government, as these measures are not linked to the budget. 

The emergency laws do not allow for new investments from the French government, nor for accepting tenders from private businesses in projects surrounding several areas. Notably, this includes decarbonisation and energy efficiency renovations.