With France’s 2025 budget under construction, François Bayrou has put the country’s savings products, airline tickets and high earners under fiscal scrutiny, raising fears that household returns could shrink just as interest rates are easing.
The political backdrop: a new prime minister, a tight budget
François Bayrou arrived at Matignon after the fall of Michel Barnier’s government, with one urgent mission: get the 2025 Finance Bill through parliament and close a stubborn public deficit.
The calendar is brutal. The government wants the new rules clarified around mid‑March, leaving little time for households to adapt their financial decisions.
Bayrou’s team insists the package is about “solidarity” and “responsibility”. Critics see a government turning to private savings because it has run out of easier options.
Expected around mid‑March, Bayrou’s budget could reshape how millions of French households are taxed on savings and investments.
Savings accounts in the crosshairs
The measure that has set off alarm bells is a planned increase in the Prélèvement Forfaitaire Unique (PFU), France’s flat tax on capital income, from 30% to 33%.
Today, that 30% breaks down into 12.8% income tax and 17.2% social charges. The PFU is a one‑size‑fits‑all rate: it applies regardless of your income bracket or family situation, unless you opt for ordinary income tax instead.
Bayrou wants to lift this flat rate by three percentage points. On paper, that sounds minor. For long‑term savers, it matters.
What products are affected?
The PFU applies to many of the products French households rely on to build wealth:
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- Interest on bank savings and many life insurance contracts
- Dividends from shares and stock funds
- Certain regulated savings products like old PEL and CEL accounts once they lose their tax exemption
- Capital gains when selling investments, in many cases
Flagship tax‑free products such as the Livret A and Livret de Développement Durable et Solidaire (LDDS) are not taxed on interest and would remain protected. But many other “regulated” products can become taxable after a certain date or depending on when they were opened.
Raising PFU from 30% to 33% cuts the net yield of taxable savings by about 4% relative to today’s after‑tax return.
How much difference does 3 percentage points make?
Consider a saver with €20,000 in a taxable savings product yielding 3% a year:
| Current PFU 30% | Proposed PFU 33% | |
|---|---|---|
| Gross annual interest | €600 | €600 |
| Tax paid | €180 | €198 |
| Net interest received | €420 | €402 |
The difference, €18 a year, looks modest for one product and one year. Stretch that over a decade, add larger sums and multiple products, and the effect compounds. For those already frustrated by inflation and falling interest rates, the timing stings.
The political argument: “solidarity” versus savings security
Bayrou frames the PFU hike as a way to “reinforce fiscal solidarity” and fund national priorities, from hospitals to energy transition. The message: capital income should pull more weight in balancing the books.
Household associations counter that small and middle‑class savers will feel the pinch. Many used savings accounts and life insurance as a buffer during recent crises, from Covid to energy price spikes.
Financial advisers warn that another tax rise, coming just as interest rates start easing, could push people either into riskier products or simply discourage long‑term saving.
Tax on savings is rarely headline‑grabbing, yet it quietly shifts wealth from cautious savers toward the state budget year after year.
Plane tickets next: the looming hike in air travel tax
Bayrou’s package does not stop at savings. The government is also revisiting the tax on airline tickets, a tool framed both as a climate measure and a revenue raiser.
In autumn 2024, MPs voted to nearly quadruple this tax. Senators preferred a doubling. The final figure is still on Bayrou’s desk.
The context is clear: France, like its EU neighbours, is under pressure to cut CO₂ emissions from aviation while finding money for green investments. Airlines warn that another sharp rise will hurt demand, tourism and regional connectivity.
For travellers, any increase would come on top of already volatile prices. Budget flights and long‑haul holidays could become a bit less accessible, especially for families.
Targeting the very wealthy with a minimum tax
The third pillar of Bayrou’s plan focuses on the highest incomes. Individuals earning more than €250,000 a year, and couples above €500,000, could face a minimum tax rate of 20% on their total income.
France already has progressive income tax brackets and various deductions. High earners can legally reduce their bill using investment schemes, tax reliefs and structuring of income. Bayrou wants to limit the extent of that optimisation.
His argument is straightforward: very high incomes should not be able to slip below a certain contribution level, especially when public debt is high and pressure on services is intense.
“The highest incomes must contribute in line with their economic capacity,” Bayrou insists, signalling a tougher line on tax optimisation at the top.
Business lobbies warn of a risk to France’s attractiveness. They argue that piling an extra minimum tax on top of existing levies could nudge entrepreneurs, investors and skilled professionals to shift activity or residence abroad.
What this could mean for an ordinary French saver
Take a middle‑income household with three classic building blocks: a regulated tax‑free savings account, a life insurance contract, and some shares held via a securities account.
- Their Livret A stays untouched and tax‑free.
- Their life insurance contract, depending on age and amounts invested, may see slightly higher tax on interest and capital gains when money is withdrawn.
- Dividends from shares, already under PFU, would face the new 33% rate unless they opt for ordinary income tax and it works out cheaper.
If they also fly once a year for a family holiday, the ticket tax hike would add a small but visible line to the budget. None of this is devastating on its own, yet the impression of a creeping squeeze on the middle class is hard to ignore.
Key tax concepts worth unpacking
For readers outside France, a few terms help make sense of the debate:
- PFU (flat tax on capital income): a single rate applied to most capital income, designed to simplify an otherwise complex system.
- Regulated savings accounts: products whose interest rate and rules are set by the state, often with partial or total tax advantages.
- Assurance‑vie (life insurance): a long‑term wrapper used not only for protection but also for investing in funds and bonds, with specific tax rules depending on how long the contract is held.
Each of these instruments has its own thresholds, dates and exceptions. Small legal changes—like a three‑point rise in PFU—can have different outcomes depending on when a contract was opened or how much is invested.
Practical scenarios: who feels what?
Imagine three typical profiles:
- The cautious saver: €15,000 on a Livret A, €10,000 in a taxable savings account. They are shielded on the Livret A but see slightly lower net interest on the taxable account. Their main reaction is frustration at falling real returns.
- The investor in funds and shares: €80,000 in life insurance invested in equity funds, plus a portfolio of shares. Their annual tax bill on dividends and realised gains edges up. They might consider holding periods and tax‑efficient wrappers more carefully.
- The high‑earner professional: €300,000 income, using deductions and schemes to keep effective tax low. The new minimum tax could substantially increase their contribution, pushing them to revisit their residence or investment choices.
The distributional question sits at the heart of the political fight: does the package really hit the wealthy hardest, or does it nudge the middle class more than headline numbers suggest?
Risks and side effects for the French economy
Raising taxes on savings brings several potential side effects. Some households might shift money from bank products into real estate, which is already under pressure from high prices and tighter credit. Others might take on more risk in search of untaxed or lightly taxed returns, such as certain corporate structures or foreign assets.
For banks and insurers, higher taxation can reduce the appeal of their standard products, forcing them to innovate or accept lower inflows. At the same time, the state gains a steady revenue stream, which can stabilise public accounts if growth falters.
The tension is clear: the government needs money for public services and climate action, yet it must avoid crushing the incentive to save and invest. Bayrou’s proposals on savings, flights and high incomes sit precisely on that fault line, and French households are waiting to see how hard the next budget will bite into their nest eggs.