Modification of the Income Tax Bracket for Individuals
Among the dozens of measures proposed by the 2025 Finance Bill, one of the most contentious is the modification of the income tax bracket for individuals (IRPP). In the October 15th version, the new tax bracket was as follows:
- 0 to 5,000 TND: 0%
- 5,000.01 TND to 10,000 TND: 15%
- 10,000.01 TND to 20,000 TND: 25%
- 20,000.01 TND to 30,000 TND: 30%
- 30,000.01 TND to 40,000 TND: 33%
- 40,000.01 TND to 50,000 TND: 36%
- Above 50,000 TND: 40%
However, this proposal has sparked strong opposition. High-income earners have deemed it unfair that they would be taxed at such high rates. Several professions, including bankers and doctors, have publicly expressed their discontent through official statements. For these professionals, there is a risk that over-taxation could exacerbate the brain drain, as they may seek more lucrative contracts abroad.
Furthermore, representatives of the people in both chambers have argued that the 50,000 TND threshold does not accurately reflect wealth. As a result, a new, more consensual tax bracket has been proposed:
- 0 to 5,000 TND: 0%
- 5,000.01 TND to 10,000 TND: 15%
- 10,000.01 TND to 20,000 TND: 25%
- 20,000.01 TND to 30,000 TND: 30%
- 30,000.01 TND to 40,000 TND: 33%
- 40,000.01 TND to 50,000 TND: 36%
- 50,000.01 TND to 70,000 TND: 38%
- Above 70,000 TND: 40%
Under this new bracket, individuals with an annual taxable income of 30,000 TND will see a 1.5% increase in their salaries, equivalent to 450 TND per year. On the other hand, those earning 60,000 TND will see their IRPP increase by only 350 TND, compared to 550 TND in the initial version.
In our opinion, the impact on the economy remains the same, as those with medium and low incomes have a higher proportion of their income to spend, which will lead to a new wave of inflation. While some of this will be recovered through VAT, the priority should be given to production and supply to ensure that these salary increases translate into concrete purchasing power.
