The government plans 9 billion euros in corporate tax breaks to boost hiring and investment, while income taxes will be cut by 2 billion euros.
"This will represent a real gain for taxpayers, especially those going through difficult periods and seeing their income lower," said Christian Eckert, minister of state in charge of the budget.
The budget, detailed in a Cabinet meeting, is a "confirmation" that the government intends to "put public finances in order", the government spokesman Stephane Le Foll said.
The government outlined savings of 16 billion euros to bring public spending down to 55.1 per cent of economic output, from 55.8 per cent in 2015.
The budget is the first under President Francois Hollande to meet the government's deficit targets.
"This budget is about sticking to our commitments," said Michel Sapin, minister of finance.
France is trying to bring the deficit within the European Union limit of 3 per cent of gross domestic product by 2017. The 2016 budget estimates a deficit of 3.3 per cent next year, down from 3.8 per cent this year.