Income Tax: see the new discount table – 04/30/2023 – Market

The government of President Luiz Inácio Lula da Silva (PT) published, this Sunday night (30), a provisional measure with the new monthly table of Income Tax discounts, which will come into effect from May 1, 2023, Day of Work.

The table brings readjustment in the IR exemption range, increasing the number of taxpayers who will stop paying tax. Government calculations are that 13.7 million will be exempt with the measure.

As announced by Lula on national television, salaries, retirement and pensions of up to R$ 2,640 will not pay Income Tax after the readjustment. The president also announced the new value of the minimum wage, of R$ 1,320.

“We are changing the income tax exemption range, which eight years ago was frozen at R$1,903. the end of my mandate, the exemption will be valid for up to R$ 5,000 per month”, said Lula, in a speech that began at 8 pm.

See the monthly income tax table from May 2023

Calculation Basis (BRL)	Rate (%)	Portion to be deducted from the IR (BRL)
Up to 2,112.00	zero	zero
From 2,112.01 to 2,826.65	7.5	158.40
From 2,826.66 to 3,751.05	15	370.40
From 3,751.06 to 4,664.68	22.5	651.73
Above 4,664.68	27.5	884.96

See the monthly income tax table until April 2023

Calculation basis (in BRL)	Rate (in %)	Installment to be deducted (in BRL)
Up to 1,903.98	–	–
From 1,903.99 to 2,826.65	7.5	142.80
From 2,826.66 to 3,751.05	15	354.80
From 3,751.06 to 4,664.68	22.5	636.13
Above 4,664.68	27.5	869.36

The provisional measure also brings the creation of a unified deduction of 25% on the IR exemption range, which amounts to R$ 528 per month, and can be applied to all income ranges. However, the taxpayer may choose either the unified deduction or the other legal deductions already permitted by law.

The provisional measure brings a readjustment of 10.92% in the exemption range, which will rise from the current R$ 1,903.98 to R$ 2,112, in addition to a fixed simplified deduction of R$ 528. taxpayers who earn up to two minimum wages and there will be a decrease in income tax for those with higher taxable income.

UNDERSTAND THE CALCULATION:

In order for taxpayers who earn up to two minimum wages to stop paying Income Tax, two measures will be taken:

• Immediate update of the Income Tax exemption range from R$ 1,903.98 to R$ 2,112
• Creation of simplified monthly deduction in the amount of BRL 528

By subtracting BRL 528 from BRL 2,640, the amount that will remain is BRL 2,112, and, according to the new table, whoever earns up to BRL 2,112 will not pay Income Tax.

Workers with higher income will have less discount

As no correction was made for all ranges of the Income Tax table, workers with higher incomes will have a smaller advantage. According to Federal Revenue simulations, salaries between R$ 2,112.01 and R$ 5,000 are the biggest beneficiaries. Incomes from R$ 10,000 will have a smaller impact.

Calculations by Unafisco Nacional show that the discount to be given by the government will make most taxpayers stop paying R$ 15.60 of Income Tax per month. Per year, it will be R$ 187.20.

According to the entity, the readjustment covers only part of the losses of workers with the IR table over the years. The last adjustment was made in 2015, during the government of Dilma Rousseff (PT). Afterwards, there was no more correction.

There are still accumulated losses from previous years which, according to Unafisco, lead to a loss of 153.29% until March of this year, if we consider the inflation measured by the INPC (National Consumer Price Index), of the IBGE (Brazilian Institute of Geography and Statistics).

If the accumulated correction were applied, wages of up to R$ 5,280 would not pay tax. For Mauro Silva, president of Unafisco Nacional, the change made by the government is “timid and frustrating”.

“The only thing that is new is changing the exemption limit from R$ 1,903.98 to R$ 2,112”, he says.

What has changed in the Income Tax table?

The federal government readjusted the Income Tax exemption range by 10.92%, which will rise from the current R$ 1,903.98 to R$ 2,112. In addition, a standard discount of BRL 528 will be given in all income brackets. As a result, wages, retirement benefits and pensions of up to R$ 2,640 stopped paying the tax.

For other income brackets, there will also be a monthly relief and taxpayers must pay BRL 15.60 per month less in income tax compared to the amounts charged until April 30, 2023. In the year, the discount is BRL 187.20.

When will the change take effect?

The change takes effect from May 1st, Labor Day, as announced by President Lula on national television. According to the government, companies will have to adapt their systems to apply the new salary table. The same adaptation will be made by the INSS and by state and municipal regimes and the Federal District.

Will everyone pay less income tax?

Yes, everyone will be able to have a standard discount of R$ 528 in the Income Tax month by month or opt for the legal deductions already foreseen in the legislation. The new rule is more advantageous for those earning up to R$ 10,000, according to the Revenue. Higher wages will have a smaller benefit.

How much will be the discount on my salary and my retirement?

Calculations made by accountant Edilson Ferrreira Junior, partner at CF Contabilidade and vice-president of the interior of CRC-RJ (Regional Accounting Council of the State of Rio de Janeiro), at the request of Sheet show how the impact of the change should be according to the taxable income of taxpayers.

For retirees, the discount will depend on age. This is because those aged 65 and over have a greater exemption from Income Tax and pay less income tax from the month in which they have their birthday. See the simulations below.

Will you change anything in the 2023 income tax return?

No. The new measures will have an immediate impact with regard to the monthly tax payment, but will only be informed in the 2023 Income Tax return. This is because the annual adjustment that the taxpayer makes with the tax authorities occurs in the year after the tax payment.

This year, the statement that will be delivered by May 31 is based on the 2022 IR table, the same valid until April 30 of this year.

WHO SHOULD DECLARE THE INCOME TAX IN 2023

You must declare the IR this year that, in 2022:

• Received taxable income above BRL 28,559.70, which includes salary, retirement and pension from the INSS or public bodies

• Received exempt income, non-taxable or taxed exclusively at source (such as savings income or FGTS) above BRL 40,000

• Had a capital gain (ie, profit) on the sale (transfer of ownership) of goods or rights subject to the levy of tax; This is the case, for example, of the sale of a car with a value greater than the amount paid for the purchase.

• Was exempt from IR on capital gain on the sale of residential properties, followed by the acquisition of another residential property within 180 days

• Carried out operations on the stock, commodity, futures and similar exchanges, the sum of which was greater than R$40,000 or with net gains subject to the levy of tax;

• Had, on December 31, possession or ownership of assets or rights, including bare land, in excess of BRL 300,000

• Obtained gross revenue in rural activity in an amount greater than R$ 142,798.50

• Want to offset losses from rural activity in 2022 or previous years

• He moved to Brazil in 2022 and was in that condition on December 31