France ends tax exemption for work‑medal bonus starting 2026

A 2026 French finance law removes the long‑standing tax exemption on the gratuity paid with the Medaille d'honneur du travail. Until 2025, the bonus – granted after 20, 30, 35 or 40 years of service – was exempt from income tax up to one month's salary. From 1 January 2026 the amount is fully taxable and will be subject to withholding tax. A transitional period keeps social contributions partially exempt, but from 1 January 2027 the gratuity will be treated like ordinary salary, subject to both income tax and social contributions. The change means many senior employees will see a lower net payout, reducing disposable income for workers close to retirement. The reform is part of broader efforts to eliminate niche tax benefits and streamline public finances.