French Prime Minister François Bayrou attended a speech at the Hôtel de Brienne in Paris, July 13, 2025 (Pool / Ludovic Marin)
As part of the 2026 budget, the government wishes to establish a lump sum reduction of 2,000 euros per year and per person for retirement pensions, replacing the 10% reduction for professional expenses available to retirees.
“Quite largely redistributive”. The lump sum reduction of 2,000 euros for retirees, announced by the government for the 2026 budget,
would benefit the least affluent
If it also applies to the calculation of housing aids, and would allow
a budget gain of “around 550 million euros”,
According to the Institute of Public Policy (PPI).
“The transition to the reduction of 2,000 euros is
quite largely redistributive,
Increasing the services and reducing the amount of tax due for less affluent retirees while increasing the tax rate for easier retirees, “IPP said on Tuesday, which brings together researchers specializing in public policies. As part of the next budget, the government wishes to establish a
flat -rate reduction of 2,000 euros per year and per person
For retirement pensions, replacing the 10% reduction for professional expenses which are currently benefiting from retirees. This 10% reduction is also applied to the income declared to the family allowance funds, to calculate the eligibility for housing allowances. It is not yet known if the lump sum will also replace it in this case.
“Improvement of the budget balance of around 550 million euros”
“The application of the new reduction modality both to calculate income tax and that of housing aid would be strongly redistributive, while allowing a
Improvement of the budgetary balance
of around 550 million euros, “said the PPI.” On the contrary, an application only to the calculation of income tax would lead to almost twice as important revenues (around one billion euros), for a lesser redistributive effect and a large majority of losers to the reform, “he said.
Currently, the amount deducted corresponds to 10% of retirement pensions, with a maximum of 4,399 euros (for income from 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 the right 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 IPP. 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 million.
