France Considers Flat Tax Increase in 2026 Budget Talks

The prospect of raising France’s flat tax, set at 30% since 2018, has resurfaced in discussions around the 2026 finance bill. While no decision has been finalized, officials at Bercy are studying scenarios that would see the rate climb to 33% or even 36%. The move comes as the government faces persistent structural deficits and mounting pressure to generate additional revenue.

Revenue Goals and Fiscal Pressures

According to internal estimates, each percentage point increase in the flat tax could deliver about €240 million in additional income. A rise to 33% would generate roughly €720 million, while a 36% rate could yield up to €1.44 billion annually. Such revenues are seen as critical to containing the public deficit, forecast to reach 4.7% of GDP in 2026.

Political and Economic Divisions

The flat tax, or PFU, has been a defining feature of Macron’s fiscal policy, symbolizing a pro-investment and simplified taxation approach. Revisiting it now is stirring tensions within the majority. Some lawmakers warn that increasing the rate risks undermining a central pillar of Macronism, while others argue the adjustment is necessary to meet budgetary imperatives.

Business circles, including representatives of the AFEP, caution that such a measure could deliver a fiscal shock. They warn of potential consequences for competitiveness, investment, and job creation, even as advocates claim the tax burden on savings in France would still remain lower than in many other European countries.

Wider Taxation in Focus

The flat tax debate is also part of a broader reassessment of capital taxation. Alternatives such as the so-called “Zucman tax”—a 2% levy on wealth above €100 million—remain under discussion despite its rejection by the Senate. Proposals to reduce certain tax loopholes, including exemptions under the LODEOM scheme in overseas territories, are also being examined.

Prime Minister Sébastien Lecornu has ruled out reintroducing the wealth tax (ISF), maintaining that fiscal consolidation must continue without revisiting that politically sensitive measure. Within this framework, adjusting the flat tax is seen as a possible compromise—less explosive than reviving the ISF, but still politically and economically charged.

Implications for Investors and Savers

For individuals, a flat tax hike would directly reduce the net returns on many investments, including cryptocurrency holdings not sheltered in tax-advantaged accounts. Such a change could push some savers toward the progressive income scale or accelerate tax optimization strategies. The government thus faces the delicate task of balancing its fiscal needs with the risk of eroding investor confidence.