2024-01-29 03:00:00
When we talk about reducing taxes, there is no minimum regulatory or legal threshold. In reality, the possibility of reducing the amount of tax depends on the personal choice, psychology and individual history of each taxpayer.
Some people seek to pay as little tax as possible, while others are comfortable with the idea of contributing to public services like free education and various safety nets.
The main tax reduction mechanisms
Do you earn some money? Are you wondering if you earn enough to exempt from taxes?
Stop asking yourself this question. From the moment you pay your first euro of tax, know that there are ways to reduce this tax.
There are several mechanisms to reduce the amount of your tax. Some of them are accessible from a few hundred euros of taxable income.
The tax deduction
The tax deduction consists of subtracting from the overall gross income an amount corresponding to certain expenses.
This mechanism is particularly advantageous for taxpayers with a significant income since, for the same amount paid (for example, 1000 euros), the deduction offers significant advantages depending on the tax bracket:
- 0% bracket: 0 euro tax savings
- 11% bracket: 110 euros tax savings
- 30% bracket: 300 euros tax savings
- 41% bracket: 410 euros tax savings
- 45% bracket: 450 euros tax savings
The tax credit is a direct reduction in the amount of tax owed. Unlike the deduction, the tax credit can be interesting for people with low or moderate income since it allows, in certain cases, to receive a refund even if the taxpayer does not pay taxes.
Adopt a tax reduction strategy adapted to your situation
As mentioned previously, there is no minimum threshold to benefit from a tax reduction. However, the choice to use one mechanism rather than another must be consistent with the situation and objectives of the taxpayer.
Case of low-tax taxpayers
For people with a taxable income of less than or equal to 250 euros, it is generally not relevant to invest in savings schemes blocked for a minimum period of six years. Indeed, there is no certainty of recovering the entire initial investment at the end of the period. In this case, the tax credit may be an interesting option.
Case of high-tax taxpayers
Taxpayers in higher tax brackets have every interest in using tax deduction mechanisms when they are consistent with their objectives. Solutions requiring a larger initial investment (such as purchasing a new or old property to renovate) can offer a significant and lasting reduction in taxes.
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