Finances: Why Your Net Salary could Decrease in September

Starting in September, many French people could see a decrease in their net salary on their payslip. This decrease will add to the financial burdens of households. It is neither a pay cut decided by the employer nor a payroll error, but a direct consequence of the withholding tax system, established by the French tax administration.

An automatic tax adjustment that weighs on September salaries

Every year, at the same time, the tax administration adjusts the withholding tax rate based on the income declared the previous year. This readjustment can lead to a decrease in the net salary received by taxpayers.

For example, an employee who received 2000 euros net per month sees their income drop to 1979 euros after the withholding tax rate increases from 2% to 3%, following an increase in their income in 2023. This decrease of 21 euros per month is directly linked to the tax adjustment.

The mechanism is simple: if the income of one year is higher than that of the previous year, the withholding tax rate increases accordingly. The tax administration forwards this new rate to the employer, who applies it automatically from September. Employees then notice the decrease on their payslip, often without prior notice.

Thus, this decrease in net salary simply reflects the evolution of the taxpayer’s income and the adjustment of the withholding tax rate, a system designed to ensure more accurate tax collection.

The options to manage your withholding tax rate and avoid September surprises

In light of this situation, it is essential for taxpayers to be well-informed about the tools at their disposal to adjust their withholding tax rate and mitigate the impact on their net salary. The tax administration offers an online option to modify this rate, particularly in case of a change in financial or family situation, such as a decrease in income or the arrival of a child. This approach can reduce the applied withholding tax rate, providing some budgetary relief.

However, this strategy carries risks. significantly lowering the withholding tax rate can result in a higher balance to pay at the end of the year, as the tax administration would not have collected all the due amounts. Moreover, it is possible to opt for a non-personalized withholding tax rate, calculated solely on salary income, without including other income sources. This option may be interesting for taxpayers with substantial additional income, but it requires careful financial management.

Anticipating changes in your financial situation and making informed decisions can not only avoid inconveniences at the end of the year but also allow for more serene budget management throughout the year. For example, with the end of the Airbnb tax niche, it is important to know how to protect your income to avoid an unpleasant surprise. Good financial preparation will allow you to better navigate these changes.