The social and tax measures for households set out in the 2026 budget target three categories of people: families with children over the age of 14 affected by the reduction in child benefit, people earning an income from work close to the minimum wage who will benefit from the increase in the activity bonus; and households with investment income subject to the increase in the CSG and the renewal of the differential contribution on high incomes (CDHR). The authors analyse their budgetary and redistributive effects, as well as their impact on gender inequality and on children’s standard of living. The authors also discuss the mechanisms that may explain the significant uncertainties surrounding the yield of the CDHR.
Budgetary and redistributive effects of the 2026 social and tax measures
This chapter examines, on the one hand, the impact of the main measures in the 2026 budget aimed at households. It also examines several factors that may explain the uncertainty surrounding the yield from the differential levy on high incomes (CDHR), before finally analysing the varying effects of the budget measures across different socio-demographic categories of households.
Reference Budget Outlook – June 2026 – Chapter 2
Presentation
Key Results
- Across the population as a whole, the effects of the measures under consideration are very small. Only 14 per cent of
individuals are affected to the tune of at least 5 euros per month. - The average losses appear to be limited and concentrated at the extremes of the income distribution: at the top, due to the increase in the CSG on certain forms of investment income and the renewal of the CDHR, and at the bottom, due to the reduction in child benefit. The 1 per cent of people with the highest standards of living are the most affected.
- The gains in household living standards stem almost exclusively from the reform of the activity bonus. On average, these gains amount to 0.3 per cent of the standard of living for individuals with a standard of living of between €1,200 and €1,900 per month (i.e. between the 14th and 38th centile).
- The yield from the CDHR remains uncertain. The low advance payment of the CDHR made in December 2025, compared with its estimated automatic yield, can be explained by several factors: calculation errors relating to households, the weight of exceptional income in the tax base; or behaviour such as bringing forward, deferring or substituting income, which may also affect the bases for other compulsory levies.
- Households with three or more children account for 14 per cent of the population and are more often found at the lower end of the income distribution. It is these households that experience the sharpest average decline in living standards, amounting to 0.4 per cent for couples and 1.3 per cent for single-parent families.
- Reforms to social security benefits benefit men more than women within couples. Indeed, it is more often the man whose earnings entitle him to the highest top-up under the activity bonus scheme. Once these reforms are fully implemented (with the activity bonus taking full effect for the full year and the transition period for child benefit coming to an end), the estimated gain for men could be up to three times greater than that for women, assuming a comparable standard of living.
