Do you want to know the amount of your tax? You must first define which income is taxed. Between gross income, net taxable income, and overall net income, it is sometimes difficult to navigate.
WHAT IS THE DIFFERENCE BETWEEN GROSS INCOME AND NET TAXABLE INCOME?
The overall gross income is made up of all the income, profits and gains of a taxpayer over a calendar year, from which certain deductions are subtracted. Gross income includes, for example, retirement pensions, industrial and commercial profits and salaries.
Net taxable income corresponds to the income taken into account in the calculation of income tax . When calculating your tax, this net taxable income is subject to the income tax scale. Net taxable income is obtained by deducting the relevant charges and deductions from the gross income.
HOW TO CALCULATE YOUR ANNUAL NET TAXABLE INCOME?
DETERMINE YOUR OVERALL GROSS INCOME
To determine your net taxable income, you must start from your overall gross income. As mentioned above, it is made up of all income, profits and gains accrued by the taxpayer during the previous calendar year. It is then necessary to subtract from this sum the allowances provided for according to the type of income. For example, in the context of wages, a 10% reduction is automatically made if you do not choose the declaration to the real regime. This allowance corresponds to the various professional expenses borne by the employee.
DEDUCT YOUR OVERALL NET INCOME
Once the overall gross income has been determined, it is necessary to subtract from it the deductible expenses listed in the Official Bulletin of Public Finances. You then get the overall net income. Deductible expenses are many and varied: alimony, retirement savings contributions, etc.
GET YOUR NET TAXABLE INCOME
Finally, to obtain the net taxable income, you can subtract the special allowances from the overall net income. The special allowances concern only certain sections of the population: retirees, invalids, married children, PACS or dependent children being attached to the tax household of the parents. These allowances vary according to the amount of the overall net income of the household and the situation of each one.
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WHAT ARE THE TAXABLE NET INCOME LIMITS?
Below a certain amount, the taxpayer may be exempt from income tax. However, this income ceiling is determined by the family quotient and therefore differs according to the taxpayer's family situation. For a single person, with a family quotient made up of a single share, the amount will therefore be different from that for a married couple with 3 children. The thresholds are also reviewed each year and the amounts redefined. To find out if your net taxable income is higher or lower than the income ceiling, you can refer to the scale showing the different exemption thresholds.
QUESTIONS AND ANSWERS ABOUT TAXABLE INCOME
WHAT IS THE REFERENCE TAX INCOME?
The reference tax income is an amount used to determine whether you are eligible for certain social benefits or tax exemptions. It appears on your tax notice, on the first page. The calculation of the reference taxable income (RFR) is based on the net taxable income, but not exclusively. The RFR therefore depends on the following elements:
- Net taxable income
- Income from movable capital
- Savings contributions
- Certain income exempt from tax
- Income and capital gains taxed at a flat rate
I AM AN EMPLOYEE, WHAT DOES THE REDUCTION IN OVERALL GROSS INCOME CORRESPOND TO?
As an employee, you advance expenses necessary for your professional activity (transport, food, etc.). The tax authorities take these amounts into account when calculating your income tax. As a result, a 10% reduction is made on your income.
