There are two ways to reduce your income tax. The first is to reduce taxable income, the other to take advantage of tax exemption schemes.
Optimize your income tax by reducing your taxable income
Deduct child support paid to a child of full age
While many parents prefer to keep their adult children under their tax home, it is sometimes more advantageous to deduct child support.
- € 5,732 per child if your child does not live under your roof
- € 3,407 per child if your child lives under your roof
The company savings plan
This device gives the employee the opportunity to save on a savings product provided by the company. The PEE can be fed by the employee and by the company (matching). Amounts related to the employer’s contribution are exempt from tax under two conditions:
- The contribution can not exceed three times the payments made by the employee
- The contribution must remain below 8% of the annual social security ceiling
Sums paid by the employee are not deductible except for the profit-sharing and participation (under conditions).
Deduct real costs
The calculation of the income tax takes into account the professional expenses and applies a standard deduction of 10%. The employee may, however, opt for the deduction of actual expenses by sending a letter of declaration of actual costs to the tax office. This procedure helps to re-evaluate meal and car expenses.
Popular retirement savings plan (Perp)
It is a savings product long-term that allows you to benefit from a regular retirement income after retirement. The capital can be either returned in the form of annuity or capital (up to 20% maximum). It can also be returned up to the amount of the contribution needed to acquire a principal residence (provided that the saver did not own his principal residence during the previous 2 years). The sums paid on the Perp are deductible each year, limited to a certain ceiling (maximum between 10% of the previous year’s income, within the limit of 30,893 euros and 10% of the annual ceiling of the Social Security, or 3,862 euros) .
Reduce your income tax thanks to tax exemption schemes
Invest in the Overseas Departments and Territories (DOM-TOM)
The Girardin law allows the investor to finance industrial equipment or social housing in Overseas in exchange for a reduction of his income tax up to € 60,000. This is a one-shot tax exemption solution: in the year following its investment, the investor can benefit from a tax reduction greater than his initial investment. He nevertheless agrees to keep his investment for 5 years.
Rental investment in new real estate
The Pinel law , law of property tax exemption, allows the investor to reduce his income tax. It offers the possibility of deducting up to 21% of the total value of a property over a period of 6 to 12 years.
Energy transition tax credit (ISCED)
You can claim a tax credit if you have made expenditures to improve the environmental quality of your main home. The credit amounts to 30% of the expenses (excluding labor) in the limit of 8 000 € for a single person and 16000 € for a couple.
Donations or contributions made to organizations of general interest make it possible to obtain an income tax reduction. It must be an unrequited gift to a non-profit organization, with a social purpose and selfless management, for the benefit of the general interest. In the case of a work of general interest or public utility, the income tax reduction is equal to 66% of the amounts paid within the limit of 20% of taxable income. The taxpayer may prefer to reduce, however, 75% of his donations from his Property Tax.
Employ an employee at home
If you employ an employee at home, you are eligible for an attractive tax reduction. The tax benefit (reduction or credit) is equal to 50% of expenses, which can not exceed 12,000 euros per year.
Invest in a local investment fund (FIP)
By investing in a FIP, the investor supports SMEs and benefits in return for a reduction in income tax of 25% of the amount invested. If this FIP invests overseas, the reduction rate goes up to 38%. It should be borne in mind, however, that this is an investment that has been blocked for at least 5 years in unlisted companies and therefore presents a risk of capital loss.