correction would increase exempt range

More than fifteen million Brazilians could avoid paying income tax for the 2022 calendar year if the table were corrected for the inflation accumulated since 1996, increasing the exemption range.

The estimate was calculated by Unafisco Nacional (National Association of Tax Auditors of the Federal Revenue Service of Brazil). According to the entity, Brazilians who earn up to R$ 4,400 per month should be exempt from paying the IR.

Without the correction, the amount unduly withdrawn from the 15,299,261 Brazilian families that should be exempt reaches R$ 164.5 billion in 2022.

For Unafisco, the loss of revenue could be offset by higher taxation on the distribution of profits and dividends and large fortunes.

With the disclosure that inflation in Brazil reached 10.06% in 2021, the lag of the Income Tax table reached 134.5%, indicates the association.

Bolsonaro breaks campaign promise

In 2022, the government decided not to correct the table again, for the seventh year in a row without a readjustment. Thus, President Jair Bolsonaro enters his fourth and final year in office without fulfilling his campaign promise to raise the exemption range to five minimum wages (corresponding to R$6,060 in 2022). Today, the exemption is only for those who earn up to R$ 1,903.98.

After the IR reform proposal stalled in the Senate, there was an expectation that the government would grant the correction of the table via a Provisional Measure (MP), as has already happened in the administrations of previous presidents. Ultimately, however, the government decided not to make any corrections.

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