Less withholding, higher disposable income, impact on IRS settlement and/or reimbursement. There are already new IRS tables for the first and second semesters of 2023.
Temporary withholding tables for 2023 have already been published in the Diário da República🇧🇷 Temporary because, in the second half of the year, there will be a new system for calculating withholding tax.
Thus, to give time to paying entities to adapt their systems to the new withholding models, in the first half of the year there will be this transitional period.
These temporary tables, which will be in force in the first half of the year, already accommodate, however, the changes in terms of IRS contemplated in the OE2023, namely the new minimum existence rules, the update of the levels by 5.1% and the decrease by two percentage points (from 23% to 21%) of the second tier marginal rate.
In addition, and from January 2023, salaries and pensions equal to or greater than 762 euros monthly gross start to be withheld at source, which translates into an increase of 52 euros per month compared to the current salary exemption value (which is 710 euros) and 42 euros for pensions.
What changes in July 2023?
As of July of next year, a new withholding model will come into effect. The Minister of Finance has already gone public to say that it is a “much fairer” model, since it prevents, in the event of a salary increase, that all income is taxed at the highest withholding table. That is, an increase in gross salary “will always correspond to an increase in net monthly income”.
The new tables will thus bring less retention and therefore more disposable income. However, it is important not to forget that the impact of this reduction in withholding will be felt in the settlement and/or reimbursement of the IRS to be delivered in the following year. At tables for the second half of the year have also been published in Diário da República.