IFI: cap at 75 % of worldwide income

The cap reduces your French wealth tax (IFI) when its total, combined with your previous year's income taxes, exceeds 75% of your worldwide income for the previous year. It is only available to taxpayers whose tax residence is in France. You request it on form 2042-IFI, boxes 9PR and 9PX.

This page details the formula, the income considered, and provides an example. The threshold, the tax brackets, the 30% allowance, and IFI debts are covered on a separate page. The IFI cap is also distinct from the overall cap on tax breaks.

The formula of article 979

According to the BOFiP (BOI-PAT-IFI-40-30, version of 08/06/2018, in force), the IFI (French wealth tax) of a taxpayer whose tax residence is in France is reduced by the difference between two amounts. If the percentage of 75% is exceeded, the excess is deducted from the IFI due.

Reference year. For the IFI (French wealth tax) of year N, the taxes and income taken into account are those of year N-1. The 2026 practical guide refers to taxes due on income and proceeds from 2025 for the IFI 2026.

The taxes for the first term. According to the BOFiP (BOI-PAT-IFI-40-30-10, version of 22/11/2018), this refers to the IFI (French wealth tax) after deduction of the tax reduction for charitable gifts, income tax due in France or abroad, withholding taxes, social security contributions, and the exceptional tax on high incomes. These taxes are calculated before deduction of tax credits representing foreign tax and non-final withholding taxes.

The income retained for the second term

The second term includes all French or foreign income earned during the year preceding the year of IFI taxation, including income exempt from income tax and products subject to withholding tax (BOI-PAT-IFI-40-30-10, paragraphs 160 and 170).

The table in paragraph 180 of the BOFiP (BOI-PAT-IFI-40-30-10) specifies the amount retained per category. It has been read in summary.

Capital gains. These amounts are determined "without consideration of the exemptions, thresholds, reductions, and allowances provided for by the French General Tax Code (CGI)." Capital gains, whether on real estate or securities, are equal to the sale price less the sum of the purchase price and acquisition costs. Capital losses on real estate or movable property are not taken into account; losses on securities or equity interests are offset against capital gains calculated in the same way, realized in the same year or the following ten years, according to paragraph 180 of Article 150-0 D of the CGI. Capital gains from the sale of securities or equity interests that have been subject to tax deferral or a suspension of taxation are taken into account at the time the deferral or suspension expires (paragraph 190).

The deficits. Only certain category-based deficits, as provided for in article 156 of the CGI, are deductible according to brochure 2026.

Examples published by the administration

The example in paragraph 220 includes in income an exempt capital gain on the main residence.

The anti-abuse clause

The BOFiP (BOI-PAT-IFI-40-30-20, version of 02/08/2019) stipulates that income distributed to a company subject to corporation tax and controlled by the taxpayer can be taken into account in the second tax term. The condition is that the existence of the company and its use must have the primary purpose of evading all or part of the IFI (French wealth tax).

• This is not a punishment.
• Only the portion corresponding to an artificial reduction is included.
• In audits, the burden of proof regarding the main purpose rests with the administration.
• The BOFiP (Official Bulletin of Public Finances) indicates that the proper declaration of income covered by the clause cannot give rise to any penalty. When the tax authorities apply the clause on their own initiative, the penalty for abuse of rights is not incurred; penalties for deliberate omission or fraudulent maneuvers remain possible under the general rules of law, provided they are properly justified.

Declare the cap

• Case 9PR. Enter the total taxes from the previous year. Do not add the wealth tax (IFI) for the year: it is automatically included in the calculation.
• Case 9PX. You enter the income and revenue from the previous year here. The amount is 0 if it is negative.
• Supporting documents. The brochure states that you do not need to attach any supporting documents to the declaration.

Numerical example (fictitious profile): a wealth tax (IFI) of €15,690 and three income situations

Situation. A couple domiciled in France has a net taxable estate of €3,000,000 on January 1, 2026. The 2026 tax scale gives €2,500 on the portion from €800,000 to €1,300,000, €8,890 on the portion from €1,300,000 to €2,570,000 and €4,300 on the next €430,000, i.e. €15,690 of IFI. Three cases of 2025 income, net of professional expenses: €20,000 in case A, €30,000 in case B, €20,000 plus an exempt capital gain of €40,000 on the main residence in case C. The taxes due for 2025 are €2,500 in cases A and C, and €4,000 in case B.

Issue. Does the cap apply, and by how much?

Strategy. Add the IFI and the taxes, calculate 75 % of the income retained, then retain the excess of the first amount over the second.

Result.

Case C is the same as case A, but with a tax-exempt capital gain of €40,000: this is included in the taxable income and eliminates the tax reduction. The profile is hypothetical and the values are assumed. The calculation does not take into account any gifts or anti-abuse clauses, and does not predict the outcome of your specific situation.

What changes depending on your situation

• The nature of your income from the previous year, including exempt income and capital gains.
• Taxes paid in France and abroad.
• Your tax residence: the cap is reserved for taxpayers domiciled in France.
• The ownership of companies you control and the income they distribute.
• Capital gains that are deferred or suspended, and category-specific deficits.
• Gifts that qualify for IFI tax reduction.

No results are promised: the rule depends on your situation.