Tax Returns: No Tax Credits Offered by Authorities for Kilometers Driven This Financial Year
How the Freeze on Kilometer-Based Grid Revaluation Affects Your 2024 Tax Return
Deadlines are looming, and it's time to wrap up your 2024 tax return. Here's a heads up on potential financial surprises, especially if you commute to work by car. Normally, employees have the option to deduct their real business travel expenses, but this year, a hiccup: the kilometer-based grid, the tool for calculating commuting expenses, hasn't been revised yet. Yep, you guessed it - you'll likely end up paying a higher tax bill than expected. Let's break it down.
Deducting Actual Business Travel Expenses
If your work expenses are higher than the automatic 10% tax compensation, you can opt for the deduction of the actual amount. You'll then need to calculate these expenses based on the official kilometer-based grid published annually by the tax office. The amounts to be deducted depend on various factors like the type and power of your vehicle, its fuel, and your daily professional trips (up to 80 km round trip).
Unrevised Kilometer-Based Grid
The catch? This year, the tax office hasn't published a new decree about the grid revaluation, keeping the tables the same as in 2024. The office attributes the decision to a decrease in fuel prices at the pump last year in France. However, the lower costs at the pump didn't translate into savings for all drivers, particularly electric vehicle owners, who faced a +9.8% increase in the regulated electricity tariff.
So, what about the increases in insurance premiums, repair, and maintenance costs? All these are expenses the kilometer-based grid is supposed to compensate for, but they've affected all vehicle owners, regardless of fuel type. As a result, many taxpayers will find themselves with slightly smaller deductions this year due to the grid's lack of revision.
Potential Loss on Your Tax Return
Suppose the kilometer-based allowance had been revalued by the same rate as income tax for 2024, which is 1.8%. In that case, a single, 35-year-old driver traveling 4,000 km annually for work purposes in a 4-horsepower thermal car could have enjoyed an additional €44 deduction, potentially saving from €5 to €20 in taxes depending on their marginal tax rate. Similarly, a driver traveling much more (18,000 km) and driving a larger car could have saved an additional €17 to €69, depending on their marginal tax rate. Note that the savings for electric car drivers could have been even higher due to the more generous allowance for these vehicles.
Navigating the Kilometer-Based Expenses
Use the simulator on impots.gouv.fr to better understand how the kilometer-based expenses work and how they might impact your tax bill. Don't forget to keep all your receipts for trips, distance, and invoices to support your deductions in case of an audit. Finally, stay informed on the latest automotive news by subscribing to our auto newsletter.
- The lack of revaluation in the kilometer-based grid means that employees might find themselves with smaller deductions for their commuting expenses this year, potentially leading to a higher tax bill.
- The automotive expenses that are supposed to be compensated by the kilometer-based grid, such as insurance premiums, repair, and maintenance costs, have affected all vehicle owners, resulting in a potential reduction in deductions.
- If the kilometer-based allowance had been revalued by the same rate as income tax for 2024, a single, 35-year-old driver traveling 4,000 km annually for work purposes in a 4-horsepower thermal car could have enjoyed an additional €44 deduction, potentially saving from €5 to €20 in taxes.
- For those who are concerned about the impact of kilometer-based expenses on their personal-finance and tax return, it is advisable to use the simulator on impots.gouv.fr, keep all relevant receipts, and stay informed on the latest automotive news to ensure accuracy in their deductions and potential savings.
