Overall gross income, net taxable income, reference tax income… What are the differences?
Overall gross income, net taxable income, or reference tax income, do you know what these terms mean? What income will you be taxed on? We take stock of these questions!
Overall gross, overall net, net taxable income, and reference tax income are figures that derive from each other. You have to start by calculating the overall gross income.
Total gross income
Your overall gross income is equal to the sum of the income, benefits, and gains that you have received over a calendar year (for example salaries, retirement pensions, property income, etc.). On the amount obtained, certain deductions must be applied: for example 10% for professional expenses on salaries and pensions.
Overall net income
To obtain the overall net income, you must deduct from the overall gross income, the charges listed in the official bulletin of Public Finances. For example, it is necessary to deduct, where applicable:
- the annual amount of child support you have paid
- the amount you have contributed to retirement savings
- part of the CSG relating to income from assets and investment products
Net taxable income
When you have obtained the overall net income, you must, in certain specific situations, then deduct the special allowances to calculate the net taxable income.
The special allowances relate to:
- old people
- the disabled
- dependent children who have established a separate household
- married people, PACS partners, or heads of families attached to your household.
The amount of the allowance depends on the size of the overall net income.
Net taxable income and progressive scale
Net taxable income is income that is subject to the progressive scale of income tax.
Income taxed at a flat rate (for example the PFU, or levy flat rate in discharge ) is not included in net taxable income. The flat-rate tax is added to the tax resulting from the progressive scale.
Reference tax income
The reference tax income can be found on the cover page of your tax notice. It is used in particular to obtain certain social benefits (for example scholarships from colleges) and exemptions (in particular on local taxes, such as property tax ).
The reference taxable income is calculated from net taxable income and income and capital gains taxed at a flat rate but also takes into account other income:
- income from movable capital subject to a withholding tax (in particular interest from life insurance)
- certain exempt income (income from self-employed activities carried out in certain areas of the territory or certain income received abroad)
- savings contributions deducted from overall income.
Withholding tax and reference tax income
The withholding tax has no impact on the reference taxable income. The withholding tax modifies the mode of collection of the tax, not its method of calculation.
The concept of reference taxable income results from the calculation of the tax. The reference taxable income is equal to the net amount of income and capital gains used to calculate the tax, corrected for certain exemptions and deductions.
The reference tax income appears on the tax notice which also summarizes the elements and the tax base, the family quotient (family situation and number of shares), and the amount of the tax.
