Exceptional Tax on Very High Incomes Yields Only 20% of Expected Revenue in 2025

The exceptional tax on very high incomes, officially the contribution différentielle sur les hauts revenus (CDHR), has dramatically underperformed in its first year since implementation in 2025. The French government had anticipated 1.9 billion euros in revenue from this measure, but it generated a mere 369 million euros — just 20% of the target. This underachievement represents a significant shortfall in France’s fiscal expectations.

Introduced in the fall of 2024 by Prime Minister Michel Barnier’s government and incorporated into the budget approved by François Bayrou, the CDHR targets wealthy households with reference incomes exceeding 250,000 euros for individuals and 500,000 euros for couples. The tax aims to tap into very high incomes as part of a broader fiscal policy approach.

Several factors contributed to this disappointing outcome. Notably, delays in the budget vote impeded the tax’s implementation timeline, limiting its immediate effectiveness. Moreover, wealthy taxpayers employed tax optimization strategies to reduce their liabilities, a common challenge in taxing high incomes.

This substantial revenue gap raises questions about the tax’s efficacy and the government’s ability to enforce and design measures that accurately capture wealth at the highest earning levels. The performance of this tax will likely influence future fiscal decisions and debates surrounding equity and taxation in France.

As of March 2026, the government is assessing these fiscal challenges while navigating economic and political pressures related to equitable taxation. The exceptional tax on very high incomes remains a key component of France’s economic policy but requires refinements to meet revenue expectations and ensure fairness.