Income tax and tax brackets 2023
Knowing your TMI, Marginal Tax Bracket, for 2023 allows you to simply calculate the amount of your taxation (or non-taxation) on income for this year.
The declarations will be opened from April 7, 2023 to French taxpayers, and to be submitted no later than May 24 for the inhabitants of departments 00 to 19, May 31 for the inhabitants of departments 20 to 54, and June 8 for the others. .
Please note, if you make a paper declaration, you will have to return it no later than May 19, regardless of your place of residence.
So how do tax brackets work? We explain everything to you clearly!
The tax brackets are set by the income tax scale
The tax scale is determined by the finance law and approved each year by the tax authorities. This annual revaluation takes inflation into account so as not to penalize the purchasing power of households.
The income tax scale is used to calculate the amount of your gross tax, giving you the tax percentage at which you are taxed. This scale is called “progressive” because you are taxed in installments, as we will see in the example.
If your taxable income for the year 2021 is 30,000 euros, you will be taxed in 2023 according to the following progressive calculation:
- From 0 to 10,225 euros: 10,225 euros taxed at 0%, i.e. 0 euros,
- From 10,226 to 26,070 euros: 15,844 euros (26,070 – 10,226) taxed at 11%, i.e. 1,742.84 euros (15,844 × 11%),
- From 26,071 to 30,000 euros: 3,929 euros (30,000 – 26,071) taxed at 30%, i.e. 1,178; €70 (3,929 × 30%).
- From 0 to 10,225 euros: 10,225 euros taxed at 0%, i.e. 0 euros,
- From 10,226 to 15,000 euros: 4,774 euros (15,000 – 10,226) taxed at 11%, i.e. 525.14 euros (4,774 × 11%).
In all, even if your MTR is 30%, you will pay a fraction of your tax at 11%, and another at 30%. In our example, you owe 2922 euros in income tax (1,742.84 + 1,178.70 = 2,921.54).
How to determine your 2023 tax bracket?
Three steps are essential to determine for yourself the marginal tax bracket in which you fall. It does not only depend on you, but on the composition of your household. Explanations…
Know your net taxable income
Your net taxable income is your overall gross income after applying specific allowances and deductions. It includes all the income, profits and gains you received during the calendar year preceding your tax declaration (2021 income for the 2023 declaration).
The overall gross income is therefore composed of:
- Salaries,
- retirement pensions,
- property income,
- Alimony received, etc.
The overall net income is the overall gross income minus the deductible expenses mentioned by the taxes. This may include, among other things:
- alimony paid,
- Part of the sums paid into a PER Retirement Savings Plan,
- Part of the CSG on income from assets and investment income,
- Land deficits, etc.
Your net taxable income is often your overall net income, but certain situations may give rise to the right to an additional allowance. This is the case if:
- You are a disabled person,
- You are an elderly person
- You have married or PACS children attached to your tax household, etc.
Know your family quotient
The determination of your family quotient allows you to know the number of shares that is allocated to your tax household. If a single person without children benefits from one part, a married couple without children benefits from two parts. Dependent children are entitled to additional shares.
In addition, single parents, disabled people and children holding a CMI Carte Mobilité Inclusion can benefit from an additional half share.
Calculate your TMI
To calculate your marginal tax bracket, simply divide your net taxable income by the number of shares you have.
Mr Dupond has a net taxable income of 25,000 euros, he is married to Mrs Dupond who has a net taxable income of 20,000 euros. They have two children and therefore benefit from three shares of the family quotient.
Their tax bracket is therefore 11%, because it is considered that their fraction of taxable income for one part is 15,000 euros [(25,000 + 20,000) / 3]. It is therefore between 10,226 euros and 26,070 euros, i.e. an IMR of 11%.
How to determine your 2023 tax on 2021 income?
Calculate the tax due in 2023 from your TMI
If we take the example of Mr. and Mrs. Dupond, they will be taxed according to the following scale for the year 2023:
The amount of their tax will therefore be 525 euros for the year 2023.
The limits of manual tax calculation
Please note that the amount of your tax may be adjusted downwards or upwards in the following situations:
- Ceiling of the effects of the family quotient,
- Discount in case of low resources,
- Exceptional contribution on high incomes,
- Obtaining tax reductions or credits.
It is important to understand the mechanisms of its taxation, and to know the main lines of the calculation methods used by the tax administration. But it can be restrictive to learn everything, especially since the scales in force in 2023 may change the following year.
While a tax advisor will know how to calculate the exact amount of tax owed by his client in all situations, this gymnastics is not so easy for the particular taxpayer. And above all, it is not essential, because an online simulator can do it for you in a few clicks. So why deprive yourself ?
To avoid making a mistake, do an online simulation on the tax website
The official tax website provides you with a tax calculation simulator every year. The one for calculating the tax due in 2023 on 2021 income is already online, so take advantage of it to anticipate and calculate the amount of your tax today.
Two simulation versions exist:
- The first is the basic declaration, it is intended for salaried taxpayers, retirees, pensioners, etc.
- The second is the complete declaration, it is intended for taxpayers who are business owners and certain overseas investments.
If in doubt, you can choose the complete template, which includes the basic version and the add-on version, and you will see if the other fields of the form are relevant to you or not.