PER: Why It Will Remain a Safe Bet in 2024

In 2024, the tax deduction limit for the individual PER is 35,194 euros. This makes it the best tax-saving tool this year.

The Individual Retirement Savings Plan, also known by the acronym PER individuel, is a savings vehicle designed to build up capital or provide supplemental income in preparation for retirement. Its introduction in 2019, as part of the Pacte Act, replaced older programs such as the PERP and the Madelin retirement plan for self-employed individuals (TNS). This plan offers savers the opportunity to build up financial reserves throughout their working lives, with the goal of receiving supplemental income in retirement.

Contributions made to a Retirement Savings Plan, such as the individual PER, are deductible from taxable income, subject to an annually adjusted limit. For the year 2024, it is important to check the amount of this limit in order to determine the applicable tax deduction.

One of the main advantages of the individual PER lies in the tax incentives associated with each contribution. Contributions made to this plan are deductible from taxable income, thereby reducing the tax base and, consequently, lowering income tax. However, this deduction is subject to limits, which depend on employment status (employee or self-employed), income, and the Annual Social Security Ceiling (PASS).

The tax deduction limit for the individual PER is set at 10% of the taxpayer’s earned income from year n-1, but may not exceed 8 times the PASS for year n-1. Thus, for 2024, the limit is 35,194 euros. For those whose income is less than one times the PASS for the year n-1, the limit is equal to 10% of the PASS for year n-1, or 4,399 euros for 2024.

Suppose an employee contributes 10,000 euros to his or her individual PER in 2024, thereby reaching the tax deduction limit. If his or her marginal tax rate is 30%, he or she can deduct this amount from his or her 2024 taxable income, resulting in an income tax savings of 3,000 euros.

Note that any unused contribution limit from a given year can be carried over to the following three years. By opening a PER in 2024, you can use the contribution limits from the previous three years. In addition, individual contribution limits can be combined for married or domestic partnership couples.

Self-employed workers (TNS) are subject to a specific cap, equal to 10% of taxable income, capped at 8 times the PASS for the current year (37,094 euros for 2024), as well as 15% of the portion of taxable income between 1 and 8 PASS (48,686 euros for 2024). In total, the tax deduction cap for self-employed individuals in 2024 is 85,780 euros. For self-employed individuals whose taxable income is less than or equal to one times the 2024 PASS, the deduction cap is set at 10% of that PASS, or 4,637 euros in 2024.