04/09/2024 – 6:00
The 2025 Annual Budget Bill (PLOA), sent to the National Congress last Friday, the 30th, does not provide for the revision of the Personal Income Tax (IRPF) table.
In practice, the lack of correction of the income tax table means that many taxpayers will end up paying more tax as their salaries are adjusted for inflation. Furthermore, the exemption range may no longer cover those who earn two minimum wages, since the Budget proposes an increase (above inflation) of R$97 in the minimum wage, reaching R$1,509.
+ 2025 Budget foresees minimum wage of R$1,509; understand the adjustment
According to the Secretary of the Federal Revenue, Robinson Barreirinhas, the transition of the IR table may require compensatory measures if there is an update. “We now have a project to open a forecast in relation to the (fiscal) balance, but not the total amount. We will calculate to verify the impact,” he said.
Therefore, maintaining the income tax exemption from 2025 for those who earn up to two minimum wages will require compensation, such as spending cuts or increases in other taxes. According to the 2025 PLOA, the minimum wage will be adjusted by 6.87% compared to the current value of R$1,412.
During the 2022 campaign, Lula had promised that by the end of his term in 2026, he would exempt all taxpayers with a monthly income of up to R$5,000. The promise was reinforced in May 2024.
The website report This Is Money contacted the Federal Revenue Service and the Ministry of Finance for a statement on the measures that will be taken to guarantee the exemption and is awaiting a response. The Revenue Service stated that it “does not comment on rules that have not yet been published”. The text will be updated when there is a response from the Treasury.
What is the rule for exemption and tax bands?
At the beginning of the year, a provisional measure (already approved by Congress) established an increase in the exemption bracket for citizens with a monthly income of up to R$2,824, the equivalent of two minimum wages. To make this possible, the government provided an automatic discount of R$564.80, resulting in a monthly calculation base of R$2,259.20, that is, exactly the maximum limit of the bracket.
The measure exempted 15.8 million Brazilians from Income Tax.
Under the current rule, income tax is levied according to the income bracket. Taxation is applied as follows:
Exempt
until R$ 2,824
7.5%
from R$ 2,259.21 to R$ 2,826.65
15%
from R$ 2,826.66 to R$ 3,751.05
22.5%
from R$ 3,751.06 to R$ 4,664.68
27.5%
above R$ 4,664.68
Minimum wage 2025
Considering the salary increase in 2025 to R$1,509, the exemption range would have to rise from the current R$2,824 to R$3,018, if we consider the ceiling of two minimum wages for exemption.
In a statement, Unafisco criticized the measure and stated that the gap in the table is estimated at 166.01% for groups above two minimum wages. The entity also pointed out that the forecast of inflation of 4% in 2024, combined with the lack of correction of the table, will result in an effective increase in the tax burden on the middle class.
“The 2025 budget proposal without the correction of the Income Tax table represents yet another tax sacrifice for the middle class and calls into question the government’s ability to fulfill its campaign promises, while seeking to balance tax collection with the country’s economic needs,” said Unafisco.
The Federal Revenue Service received 42,421,153 declarations by May 31, the deadline for submission. The total, however, represents an increase of 2.9% compared to the number of declarations submitted in 2023.
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