Here is why the rate of your withholding tax may change in September!

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The withholding tax rate is automatically updated every year. Indeed, the tax authorities do 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 year In progress.

Like the majority of taxpayers who declared their income online, you received your tax notice in your personal space on www.impots.gouv. Your declaration allowed the tax authorities to update your rate tax deduction at source on 1 September. What are the changes what to expect on the payslip? And why ?

What is the withholding tax deduction?

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

The withholding tax consists of deducting the tax before payment of the income. Thus, the amount of tax is deducted each month from the pay slip. So the payment is spread over twelve months and the one-year lag removed. In addition, the tax automatically adapts to the amount of income received.

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

The calculation of the withholding rate is based on the data appearing on the income tax declaration. Example: income, dependents, deductible expenses, expenses eligible for tax credit, etc.

Why is the withholding tax rate updated?

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

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

Your rate will therefore change next September because the situation of your tax household necessarily evolved between 2020 and 2021.

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

This is a change effective September 1. So don’t be surprised if this change leads to changes on the pay slip.

If you find it useful, however, you can modulate it yourself the withholding tax rate. Indeed, if you have updated it yourself, the calculation of the rate at your initiative will remain valid until the end of the current year.

Therefore, without updating on your part, your withholding tax rate may have been automatically updated on September 1st.

It is therefore best to check 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 tax in the fall of 2023.

Otherwise, if your income has dropped or your tax situation has changed (birth, attachment of a dependant), it is necessary to revise your deduction rate downwards so as not to advance too much each month. tax and wait until the summer of 2023 before getting a refund.

If in doubt, go to the website www.impots.gouv.fr then in the section ” manage my updated withholding tax following an increase or decrease in your income “. Attention ! You can only decrease 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?

It sometimes happens that the calculations of Tax Administration are wrong. In these cases, some taxpayers pay too much tax, or on the contrary not enough. For information, recently, 13.7 million tax households received a refund from the tax authorities.

This refund concerns all households who paid too much tax at source last year, i.e. in 2021. It is made in the form of a transfer to your bank account. For tax households whose tax authorities do not have bank details, reimbursement is made by check.

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