France Weighs Scrapping 10% Tax Break for Pensioners Under 2026 Budget Savings Plan

Paris, April 21 (Saudi Arabia Breaking News) – The French government is considering the elimination of a long-standing 10 percent tax reduction granted to pensioners on their annual income declarations, as part of efforts to secure €40 billion in savings under its proposed 2026 budget plan.

The measure, first introduced in 1978, allows retirees to deduct 10 percent from their declared income to align with a similar deduction given to working individuals for professional expenses. However, amid growing financial pressure and a widening national deficit, the relevance of the benefit has come under renewed scrutiny.

Amélie de Montchalin, Minister for Public Accounts, did not rule out the measure in remarks published today in Paris, stating: “Age should not be a criterion for determining one’s level of tax contribution.” She added that ongoing consultations with social partners include discussions on all issues related to pensions, including tax privileges currently afforded to retirees.

The proposal is part of France’s broader fiscal consolidation plan following a reported budget deficit of 5.8 percent of GDP in 2024. The Finance Ministry is seeking ways to restore fiscal balance while addressing structural imbalances in the country’s public accounts.

Support for the potential repeal has emerged from several quarters. Gilbert Cette, President of the French Pensions Advisory Council, expressed backing for the move earlier this year. He was later joined by Patrick Martin, President of the French employers’ organisation Medef, who labeled the existing deduction for pensioners as “illogical” and “absurd”, noting that it costs the state around €4.5 billion annually.

Martin emphasized that the deduction—originally designed to mimic professional expenses incurred by active workers—has no equivalent justification for retirees. “Applying a professional expense benefit to individuals who no longer work defies both logic and fiscal equity,” he said.

However, the proposal has been met with strong opposition from pensioners’ unions. In a statement issued in March, they rejected the equivalency argument and warned that removing the benefit could increase the tax burden on approximately 8.4 million retirees, nearly half of France’s retired population. Union leaders stressed that many of those affected are not affluent and that such a move would disproportionately impact lower and middle-income pensioners.

As the French government weighs budget reform options, the fate of the pensioners’ tax break remains uncertain. The issue is likely to remain a flashpoint in national fiscal and social policy debates leading up to the finalization of the 2026 budget framework.