A new fixed reduction of 2000 euros planned for retirees: will you benefit from it?

The flat -rate reduction of 2,000 euros for retirees, announced by the government for the 2026 budget, would benefit “quite largely” at least easy if it also applies to the calculation of housing aid, and would allow a budget gain of “around 550 million euros”, according to the Public Policy Institute (PPI).

“The transition to the reduction of 2. In addition, 000 euros is quite largely redistributiveincreasing the benefits and reducing the amount of tax due for less affluent retirees while increasing the tax rate for easier retirees, “the IPP, which brings together researchers specializing in public policies on Tuesday, July 29, 2025.

2000 euros per year. For example, per new fixed reduction 2000 euros person

As part of the next budget, the government wishes to establish a lump sum reduction in 2,000 euros per year and per person for retirement pensionsreplacing the 10% reduction for professional expenses which currently benefit from retirees. Nevertheless,

This 10% reduction is also applied to the income declared to the family allowance funds. Similarly, to calculate the eligibility for housing allowances. It is not yet known if the lump sum will also replace it in this case.

“The application of the new reductioning modality both to calculate income tax. that of housing aid would be strongly redistributive, while allowing a Improved budget balance of around 550 million euros ”estimated the IPP.

“On the contrary. an application only to the calculation of income tax would lead to revenue almost twice as large (around one billion euros), for a lesser redistributive effect and a large new fixed reduction 2000 euros majority of losers to the reform,” he said.

Change without impact for part of the households

Currently. the amount deducted corresponds to 10% of retirement pensions, with a maximum of 4,399 euros (for revenues of 2024).

The change is without impact for tax households with 20,000 euros in annual pensions (40,000 euros for a couple).

Under this threshold, they will see their reduction increase. “They will therefore have income considered as lower. which open up to pay less taxes and to receive more social benefits, while it will be the opposite for tax households receiving more than 20,000 euros,” detailed the PPI.

This would result in 1.5 million winners (9% of retirees) thanks to social benefits against 1.4 million losers (8%) due to the tax increase.

If only the tax reduction mechanism is changed, this would be 100,000 respectively against 1.4 new fixed reduction 2000 euros million.

Source: AFP

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