This is why your withholding tax rate may change in September!


The withholding tax rate is updated automatically each year. In fact, the Treasury does it twice: on September 1 or January 1… Unless you have updated it yourself. In this case, the rate calculated on your initiative remains valid until the end of the current year.

Like most taxpayers who filed their income online, you received your tax notice in your personal space on www.impots.gouv. Your statement allowed the tax authorities to update your rate tax deduction at the source on September 1. What are the changes? What to expect on payroll? And because ?

What is the withholding tax deduction?

The deduction at the source of income tax entered into force on January 1, 2019, in accordance with ordinance no. 2017-1390 of September 22, 2017.

The withholding on account consists of deducting the tax before paying the rent. Thus, the amount of the tax is deducted each month from the payroll. Therefore, the payment is distributed over twelve months and the one-year delay is eliminated. In addition, the tax is automatically adapted to the amount of income received.

However, on the declaration side, nothing has changed. Each taxpayer continues to declare every year, in the spring, the income of the previous year to the tax authorities.

The calculation of the withholding rate is based on the data that appears on the income tax return. Example: income, dependents, deductible expenses, bills eligible for tax credit, etc.

Why is the withholding tax rate updated?

the withholding tax rate It is calculated from the items entered on your last tax return and the corresponding gross tax. Thus, from January 2022, you pay a withholding tax on your income at a rate that has been established based on your 2020 income tax return (filed in May or June 2021) and your 2021 tax (calculated on your 2020 revenue).

Starting in September 2022, your rate will be updated based on the items entered on your 2021 tax return (filed in May or June 2022) and your 2022 tax (calculated on your 2021 income).

Therefore, your rate will change next September because the situation of your tax home has necessarily changed between 2020 and 2021.

Multiple cases may arise : you have received more or less income, supported more or less expenses, or have seen your family quotient change.

This is a change from September 1. So don’t be surprised if this change leads to payroll changes..

However, if you find it helpful, you can adjust the withholding tax rate yourself. Indeed, if you have updated it yourself, the rate calculation on your initiative will remain valid until the end of the current year.

Therefore, without an update from you, your withholding tax rate may have been automatically updated on September 1.

Therefore, it is best to verify that this deduction rate taken from last year’s data (2021 income) still corresponds to your situation and your 2022 income.

Think ahead!

If your income has increased this year, it is better to increase your tax rate. This action will allow you to avoid having to pay additional taxes in the fall of 2023.

Otherwise, if your income has dropped or your tax situation has changed (birth, linking a dependent), it is necessary to lower your deduction rate so as not to advance taxes too much each month and wait until the summer of 2023 before obtaining a refund.

If in doubt, go to the website then in the section ” manage my updated tax withholding after an increase or decrease in your income Attention! You can only lower your tax rate if the difference between the expected tax and the new estimated amount is greater than 10%.

What attitude to adopt in case of overpayment or balance?

Sometimes it happens that the calculations of Tax Administration You are wrong. In these cases, some taxpayers pay too much tax, or on the contrary insufficient. For information, recently, 13.7 million tax households received a refund from the tax authorities.

This refund affects all households that paid more taxes at source last year, that is, in 2021. It is made by transfer to your bank account. For tax households whose tax authorities do not have bank details, the refund is made by check.

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