Retirement payroll taxes: are they taxable?
April is tax filing month. When you are about to fill or pre-fill your tax return on the income of 2022 for the year 2023, try to read it carefully before sending it by mail or saving it online. Be aware that it is possible, depending on your situation, to be exempt from taxes. If you are retired, your monthly pension is subject to social charges, in the same way as the salary of an active worker. But in some cases, you have the right not to pay them.
What is the rate of social charges on retirees?
The reference tax income is revalued by 1.6% for 2023. With the number of shares in the household (see table below), it determines the CSG rate applied to the income of retirees: exemption, reduced rate (3.8 %), median rate (6.6%) and normal rate (8.3%).
The general social contribution (CSG), the contribution for the reimbursement of social debt (CRDS) and the solidarity contribution for autonomy (Casa) apply to retirement pensions.
There are four CSG rates:
- Zero rate (exemption);
- Reduced rate (3.8%);
- Median rate (6.6%);
- Normal rate (8.3%)
The CSG rate levied on pensions is set according to the reference tax income (mentioned on the first page of the tax form), crossed with the number of shares in the household. This reference tax income may be increased by quarters or half shares, if the household has dependents and depending on the situation of the latter.
It is updated each year to take account of changes in prices excluding tobacco recorded for year n-2. The scale applicable in 2023 is increased by 1.6% in accordance with the evolution of consumer prices, excluding tobacco, observed in 2021, according to the circular of the National Old Age Insurance Fund of December 19, 2022 and the ministerial letter of December 12, 2022, notes the site of the government.
The social security financing law for 2019 introduced a measure to mitigate the transition from a rate of liability lower than or equal to 3.8% to a higher rate (6.6% or 8.3%). You will only be subject to a rate higher than 3.8% if your income exceeds the ceiling for liability to the reduced rate for two years in a row. This condition also applies to CASA and to the health insurance contribution on supplementary pensions.
What are the taxable social security contributions?
Since 1998, the CSG is the household tax that brings in the most in France: 144.7 billion euros expected in 2023 against 87.4 billion euros for income tax. The reason is simple: the base of the CSG (its calculation base) is much broader than that of the income tax (IR), and more than one in two households escapes the IR, remember specialized site All about my finances.
The persons concerned by these levies are those who are dependent on a compulsory French health insurance scheme and those whose reference tax income exceeds a certain income threshold. To be exempt, you will have to observe the number of shares in your tax household and your reference tax income.
Tax households owning a share and whose reference tax income is less than 11,614 euros are exempt. Similarly, for a tax household with 1.5 shares and a tax income of less than 13,165 euros, the zero rate also applies.
The other tax households exempted by the CSG rate are as follows:
- Family quotient of 1.75 shares and tax income of less than 16,266 euros
- Family quotient of 2 shares and tax income of less than 17,816 euros
- Family quotient of 2.25 shares and tax income of less than 19,367 euros
- Family quotient of 2.5 shares and tax income of less than 20,917 euros
- Family quotient of 2.75 shares and tax income of less than 22,468 euros
- Family quotient of 3 shares and tax income of less than 24,018 euros
Here, the rate is calculated according to the household’s 2021 reference tax income.
As a reminder, you may notice an increase or decrease in the amount of your Agirc-Arrco supplementary pension in March 2023. This change is explained by taking into account the new CSG rate, which we told you about last week.