Income Tax: understand the impacts of the law that adjusts exemption for those earning up to 2 minimum wages
“Currently, individuals with a monthly income of up to R$2,640 are exempt from Income Tax, at the tip of the country. For higher yields, progressive nets from 7.5% to 27.5% will be applied. With the proposed changes, the exemption range will increase for income of up to R$2,824, in line with the minimum wage adjustment scheduled for 2024”, he informs.
Lula also reaffirmed his promise that, until the end of his term in 2026, he would approve exemption from paying income tax for those earning up to R$5,000 a month.
Gonçalves points out that this is happening progressively, but at the same time that the exemption range is increasing, the system needs to be rebalanced so that there are no cash problems, such as cuts in transfers to other entities and bodies linked to the government.
“Every change, no matter how small, whether it’s R$100, R$200, R$300, if you think about the Brazilian population, is an astronomical effect. We need to be aware of the rebound effect, because if I’m taking from one place, I have to replace it from another”, he highlights.
Counties
He points out that municipalities have their own collection and receive a part of the constitutional fund, but if the government itself is granting the exemption on one side, it needs to cover it on the other.
“At first, I don’t really see this repercussion on the municipal funds with a decrease in revenue, especially because these are completely unrelated figures. So the government itself will have to find a solution to continue maintaining the transfer and consider the exemption range granted”, he adds.
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By Brasil 61
