CDHR 2026: France's differential tax on high incomes explained

Quick answer. France's differential contribution on high incomes (CDHR) guarantees, in 2026, a minimum effective tax rate of at least 20% of adjusted reference income above EUR 250,000 (single taxpayer) or EUR 500,000 (couple). Where income tax plus the CEHR stay below that floor, a top-up bridges the gap.

The CDHR is not a new tax bracket. It is a backstop: a mechanism that identifies very high-income households whose effective taxation, despite large amounts, falls below 20%, and lifts them to that floor. The typical target is not the salaried executive already taxed at 45% on the progressive scale, but the household whose income mostly flows through the flat tax. That is where the rule bites.

For a company director who pays themselves largely in dividends, or who books an exceptional year of securities capital gains, the CDHR can amount to tens of thousands of euros, partly due as early as December through a down payment. Planning ahead avoids a double surprise: the bill, and its timing.

The differential contribution on high incomes is codified in Article 224 of the French General Tax Code. It was created by Article 10 of Finance Act No. 2025-127 of 14 February 2025, then renewed by the Finance Act for 2026: it therefore applies to the taxation of 2025 and 2026 income.

Its purpose fits in one sentence: to ensure that the highest incomes bear taxation of at least 20% of their adjusted reference income. The word "differential" describes the mechanism. No flat 20% tax is created: existing taxation is compared with the 20% floor, and the CDHR claims only the difference where existing taxation is lower.

Two components feed this "tax already paid" figure:

1. income tax (progressive scale, or flat-tax treatment of capital income);
2. the exceptional contribution on high incomes (CEHR, article 223 sexies CGI), discussed below.

If the sum of these two represents less than 20% of adjusted reference income, the CDHR tops it up to 20%. If it already reaches or exceeds 20%, no CDHR is due.

Why a very high income can fall below 20%#

This is the heart of the matter, and the main misunderstanding we encounter. A high income does not imply a high average rate. The progressive income-tax scale caps at 45%, but capital income taxed under the single flat-rate levy (PFU, the flat tax) bears overall taxation of 31.4% in 2026, of which 12.8% is income tax and 18.6% is social levies.

For the purpose of the average rate compared with the 20% threshold, it is the "income tax" portion that counts, i.e. 12.8% on income taxed under the flat tax. A household drawing most of its income from dividends or capital gains on the sale of securities can therefore show an average income-tax rate well below 20%, even though its income runs into hundreds of thousands of euros. This is precisely the configuration the CDHR corrects.

Three cumulative conditions.

The EUR 250,000 and EUR 500,000 thresholds are assessed on reference income "adjusted" under rules specific to the CDHR (see below). The single category here covers unmarried, widowed, separated or divorced taxpayers.

If any one of the three conditions is missing, there is no CDHR. In particular, a household already taxed on average at 20% or more, even with income far above the thresholds, owes nothing: the floor is already met.

"Adjusted" reference income: not the figure on your tax notice#

The CDHR is not computed on the gross reference taxable income shown on your tax notice. It relies on a specific base, adjusted under rules of its own: certain income items and allowances are neutralised to rebuild a base representative of actual ability to pay.

We deliberately stay cautious on the detail of these adjustments: the base rules are technical, and that is exactly where a reliable calculation is won or lost. The principle to keep in mind: the CDHR base differs from the standard reference income, and any estimate must be built on the adjusted base, not on the notice figure. For the detail of the adjustments, refer to the official sources at the end, or have the calculation validated.

Confusion between the CDHR and the CEHR is common, including in online content. They are two distinct schemes that coexist and interact.

The key point: the CDHR does not replace the CEHR. The CEHR still applies and, moreover, is taken into account when computing the CDHR average rate. In practice, CEHR already paid reduces the gap the CDHR must bridge. The higher your CEHR, the closer your taxation already is to 20%, and the less the CDHR has to claim.

Consider a simplified computation, for illustration only. The amounts below are teaching assumptions, not a scale.

Take a single director, resident in France, whose adjusted reference income is EUR 600,000, made up very largely of dividends taxed under the flat tax.

In this illustration, existing taxation (EUR 96,000) represents 16% of adjusted reference income, below the 20% floor. The CDHR raises the total to EUR 120,000, i.e. the EUR 24,000 top-up. Conversely, had the same taxpayer drawn salary taxed on the scale, bringing income tax to EUR 130,000, no CDHR would be due: the floor would already be cleared.

This contrast shows why the "all dividends" profile is the scheme's natural target, and why the dividends-versus-salary trade-off deserves a fresh look in light of the CDHR.

This is the most overlooked point, and the one that creates the most cash-flow strain.

The CDHR is not settled in full the following year alongside the income-tax balance. A down payment equal to 95% of the contribution estimated by the taxpayer must be paid between 1 and 15 December of the tax year. For 2026 income, this down payment is therefore due between 1 and 15 December 2026. The balance is settled the following year, once the return is filed and the final figure established.

Two practical consequences.

First, it is up to the taxpayer to estimate their own CDHR in order to size the down payment. Underestimating exposes you to interest or penalties; overestimating ties up cash needlessly. Accuracy has real value here.

Second, the timetable forces planning from the autumn. A year-end decision (an extra dividend distribution, a December sale of securities) can push a household above the threshold and trigger a down payment due a few days later. The window is narrow.

Our reading. The CDHR does not target very high salaries: those are already taxed above 20% by the scale. It targets the composition of income, not only its amount. The household caught is the one that has, lawfully, structured in favour of capital, and now shows an average income-tax rate below the floor. The scheme rebalances this. That is no reason to abandon sound wealth-structuring choices, but a reason to recompute them with this floor in mind.

The underestimated risk. Recently, a director whose reference taxable income comfortably exceeded the thresholds was weighing a year-end dividend distribution, without having factored in that it could, combined with other income, trigger the CDHR and its December down payment. The surprise was less the amount than the near-immediate due date: personal cash was not sized for a payment within a fortnight. The lesson generally holds: for households near the thresholds, any year-end distribution or sale decision should be simulated before it is acted on.

Trade-off. Should one, to escape the CDHR, draw more salary taxed on the scale rather than dividends? Not mechanically. Raising salary lifts the average income-tax rate and may erase the CDHR, but increases social charges and shifts the overall balance. Conversely, keeping a dividend logic may remain optimal even while paying the CDHR, depending on income level and circumstances. This is a case-by-case calculation, not a rule. Our role is to set the two costed scenarios side by side.

Watch points 2026. The scheme is renewed for 2026 income but remains "exceptional" in nature: its survival beyond is not assured and will depend on future finance acts. Do not build a multi-year strategy on the assumption it disappears. Watch the adjusted base as well, whose rules may evolve.

1. Rebuild your reference income for the year, including all household income, including capital income taxed under the flat tax and gains on sales of securities.
2. Compare this amount with the thresholds: EUR 250,000 for a single taxpayer, EUR 500,000 for a jointly taxed couple. Below the threshold, the question does not arise.
3. Estimate your income tax and CEHR for the year, then divide their sum by adjusted reference income.
4. If this average rate is below 20%, a CDHR is probably due, equal to the top-up needed to reach 20%.
5. If you are near or above the threshold, size the 95% down payment before 1 December.

Checklist before the autumn for a household near the thresholds:

• Projected reference income for the year estimated, all income included.
• Share of income flowing through the flat tax identified (the factor pulling the average rate down).
• Year-end decisions (dividends, sales) simulated before deciding.
• CDHR estimate and its 95% down payment costed.
• Available personal cash checked for the December payment.
• Salary-versus-dividends trade-off reviewed in light of the 20% floor.

For the adjacent mechanics, see the flat tax 2026, ways to avoid or reduce the flat tax, the dividends-versus-salary trade-off and, more broadly, how to reduce income tax within a secure framework. Company directors will also watch the exceptional contribution on corporate tax, which follows a separate logic at company level, and the director's PER to smooth taxable income. Our wealth management service for directors and our tax support in Paris can take on these simulations.