Marginal tax rate (TMI)
The tax rate applicable to the highest income bracket of the household, based on France's progressive income-tax scale (0%, 11%, 30%, 41%, 45%). The broker uses it to advise on the choice of rental tax regime (micro-foncier vs real regime, LMNP, corporate-tax SCI) and to assess the true benefit of a tax-incentive scheme such as Pinel or a property income deficit.
Key points
- Progressive scale with five brackets: 0%, 11%, 30%, 41%, 45% in France.
- A high TMI makes tax-relief schemes more attractive (property income deficit, Malraux).
- It determines the optimal rental tax regime: micro-foncier, real regime, LMNP, or corporate-tax SCI.
- The broker incorporates it into every net after-tax yield simulation.
Frequently asked questions
Why is the TMI so important in property investment advisory?
The TMI determines how much tax is levied on each additional euro of rental income. An investor at 30% and one at 45% do not achieve the same net yield from the same property. Advice that ignores the TMI can lead to choosing the wrong tax regime or overstating actual profitability.
How does the TMI influence the choice between the micro-foncier and real-expense regimes?
Under micro-foncier, a flat 30% allowance is applied. Under the real-expense regime, all deductible costs can be claimed. The higher the TMI and the more actual costs exceed 30% of rents, the more advantageous the real-expense regime becomes. The broker runs a numerical comparison before recommending either option.
Is the TMI the only parameter to analyse before choosing a tax-incentive scheme?
No, the TMI is a starting point but other factors matter: the commitment period, the property's liquidity, existing rental income, and any anticipated exceptional income. The broker carries out a full wealth analysis to confirm the chosen scheme genuinely matches the client's situation.
In practice
An investor with a 41% TMI generates €8,000 of property income deficit under the real-expense regime. The deficit is offset against overall income, producing a tax saving of €3,280 in the same year.
Official sources
- Average and marginal tax rates · impots.gouv.fr
- Income-tax scale · Service-Public.gouv.fr
- Housing and financing information · ANIL