Budget announcements: behind the "blank year," a disguised tax increase

The government has repeatedly stated that tax increases were its red line, which must not be crossed. And on paper, during the presentation of the budget guidelines for 2026, this is not what François Bayrou announced. "We must share a blank year that concerns all categories of French people […] the income tax scales and the general social contribution (CSG) will remain unchanged," declared the Prime Minister on Tuesday, July 15 .

But in reality – if we focus on the income tax scale – its non-indexation amounts to a proportional increase in tax when the taxpayer's income follows inflation. "Freezing this scale amounts to a tax increase," translates Xavier Timbeau, director of the French Economic Observatory (OFCE). Concretely, with this measure, "the 17.5 million households already liable for tax will pay more and 280,000 will start to pay," he specifies. As a reminder, currently, the first scale above which one becomes liable for tax is set at 11,497 euros of annual income. Beyond this threshold, between 11,498 and 29,315 euros, the tax rate applies at 11% for the first of the five brackets. By maintaining this scale, in 2026, according to Xavier Timbeau, a quarter of households (the poorest) "would not be affected at all, and the remaining 75% would see their contribution increase gradually." Freezing this scale should bring in 2.6 billion euros for the government, according to OFCE estimates.

As for the CSG – which only concerns retirees – the president of the Observatory indicates that the impact of the freeze on its scale will be "less progressive" . For those who have the so-called "normal" CSG rate of 8.3% and which corresponds to retirees whose individual retirement pension amounts to more than 26,000 euros per year, the freeze on the scale will have no impact. On the other hand, for seniors exempt from this contribution – whose retirement pension does not exceed 12,817 euros – the revaluation of their pension in line with inflation could make them pass the first threshold, reaching the rate of 3.8%. "People close to the threshold who did not pay could have to pay 450 euros per year" , points out Xavier Timbeau, without being able to specify how many retirees will be affected.

If these scales have not been significantly revalued this year due to low inflation (estimated at less than 2% in 2026), according to the president of the OFCE, their freezing, which will have an impact "on many households, could be one of the arguments of the National Rally and the left to censure the budget" .