Income Tax: see who will be exempt with new table – 02/20/2023 – Market

The federal government is preparing to update the income tax exemption range, which will mean that 13.7 million taxpayers will not have to pay taxes. The exemption range should rise from the current R$ 1,903.98 to R$ 2,112 as of May, but those who earn up to R$ 2,640 will not pay income tax.

The readjustment is 10.92% and should not reach the other ranges in the table, but the tax authorities are preparing a fixed simplified deduction of R$ 528 that should eliminate the tax payable by taxpayers who earn up to two minimum wages (R$ 2,640, already considering the readjustment of the floor) and decrease the IR of those who have taxable income between R$ 2,640.01 and R$ 5,000.

How will the Income Tax exemption work?

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

Understand the calculation:

Workers with incomes of up to R$2,640 will not pay income tax. The amount will be equivalent to two minimum wages as of May, considering that the minimum wage will rise from the current R$1,302 to R$1,320.

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.

The government’s intention is for the new rules to come into force in May. They must be defined by means of a provisional measure, which takes effect immediately and needs to be approved by Congress within 120 days.

The Revenue claims that the creation of the simplified exemption aims to make Brazilians obliged to pay IR immediately feel the benefit “in their pocket”.

“There will be no withholding tax for this income range. That is, they will not have to wait for the declaration in the following year to request the refund of what was withheld”, says a note from the Revenue.

Who should benefit from the new exemption range?

Workers, retirees and pensioners of the INSS (National Social Security Institute) and federal, state and municipal public servants with a monthly income of up to R$ 2,640 will not pay tax. In the case of these professionals, the discount that is made at source will no longer exist, according to the Revenue.

Companies and public bodies will have a deadline —not yet defined— to adapt their systems.

For those who earn amounts above BRL 2,640, the simplified deduction of BRL 528 may be applied or the legal deductions already defined by law, such as the social security contribution discount, the deduction for alimony or dependents, for example.

In the case of self-employed workers who pay income tax monthly, the benefit will also be applied, and the citizen will be able to choose the deduction that is most advantageous: the simplified discount of R$ 528 or the legal deductions already provided for.

According to the Revenue, anyone with income from R$ 10,000, for example, should not benefit from the simplified deduction, as these workers already have greater legal exemptions. “It won’t be worth the simplified discount of R$ 528, since your current deductions are higher”, says a tax note.

Some examples of who will benefit from the new IR rule

*Values ​​in BRL

monthly taxable income	Amount to be considered for calculating the IR after the simplified discount of BRL 528	Income tax to be paid
2,640	2,112	there is no charge
2,700	2,172	4.50
3,500	2,972	75.40
5,000	4,472	354.47

How is the income tax declaration 2023?

Nothing will change for the worker who will declare the IR this year. The 2023 Income Tax declaration, which will be delivered between March 15 and May 31, is based on the 2022 Income Tax table, whose exemption range goes up to R$ 1,903.98.

It is only in 2024 that those benefiting from the greater exemption should not be required to declare the IR.

See the monthly table to declare the 2023 Income Tax

The base year is 2022

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

MUST BE OBLIGED TO DECLARE THE IR WHO, IN 2022:

• Received taxable income above BRL 28,559.70, which includes salary, retirement and pension, for example

• 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

• 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

• If you 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

^{*The final rules for the 2023 declaration, base year 2022, will be released next week by the Revenue}

Last update of the table was in 2015

The last update of the Income Tax table was made in 2015, by then President Dilma Rousseff (PT), and came into effect in April of that year. Currently, the gap from 2015 to 2023 is 50%, according to the Federal Revenue Service.

Calculations by Unafisco Nacional (National Association of Auditors of the Federal Revenue Service of Brazil), however, indicate that the lag in the Income Tax table is 148.10%. The ideal, according to the association, would be to correct the entire table, plus the deduction limits, with the lag percentage.

The tax waiver, in this case, would be R$ 228.84 billion in 12 months. Unafisco calculates that there are 39.7 million declarants.