Taxes: when should you lower your withholding tax rate?

Adapt to each changing situation. The withholding tax on income came into force on January 1, 2019 and promised a simplification of taxation for the French. Four years after this implementation, it has just undergone a new modification on January 1, 2023.

As the Ministry of the Economy explains, “the conditions required to obtain a reduction in the withholding tax rate are relaxed”: from 10% so far, the required threshold has been lowered to 5%. “You can, if you wish, request a reduction in your withholding tax rate if your drop in income leads to a reduction in your withholding taxes for the year by 5% compared to those normally due in the absence of a request. of modulation”, adds the site of Bercy.

Concretely, what does it change? The withholding tax rate corresponds to your tax rate and therefore determines the percentage of your income deducted for tax purposes. It is determined by the tax authorities according to your situation. For the past four years, this deduction has been made directly from your salary before it is paid, but it can be changed at any time.

Calculated on the basis of your last income tax return, the withholding tax rate can be changed by you throughout the year. The following are situations that may warrant a change:

To these different possibilities is therefore added the one mentioned above, if your income drops to the point of reducing your withholding taxes for the year by 5%. Here is how to make this change.

To change your withholding tax rate you must, unsurprisingly, access your personal space on the tax website, then in the “Manage my withholding tax” tab. Two options are then available to you, according to the Ministry of the Economy:

You can also :

Personalized rate, non-personalized rate, individualized rate… What is the difference?

The tax authorities allow you to opt for a “non-personalised” rate – or neutral rate – of your withholding tax. According to Bercy, this option “is only of interest if you receive significant income in addition to your salaries and you do not want your employer to apply your personalized rate”. Be careful, it does not take into account your family situation, since it depends only on the amount of your remuneration.

The personalized rate, on the contrary, is calculated based on your last tax return. It takes into account several elements, which are as follows:

Finally, the individualized rate is made for couples, since it takes into account “any income differences between the spouses”. The rate is calculated by the tax authorities according to the income of each member of the couple and therefore differs according to the spouses.