Federal Government adjusts Income Tax brackets and raises exemption limit

Provisional Presidential Decree adjusted the income tax brackets, but changes will only apply to tax returns filed in 2024

On April 30, the Brazilian Federal Government published Provisional Presidential Decree No. 1,171/2023. Among a number of provisions related to the taxation of individual taxpayers, the act also adjusted the values of the income tax brackets.

Read more: New rules change taxation on income from assets abroad

Monthly Progressive Tax Rates

The new brackets in force as of May 2023 are as follows:

Taxable monthly income (BRL)	Tax rates (%)	Income tax owed (BRL)
Up to and including 2,112.00	0	0
2,112.01 to 2,826.65	7.5	158.40
2,826.66 to 3,751.05	15	370.40
3,751.06 to 4,664.68	22.5	651.73
4,664.68 or more	27.5	884.96

After eight years with no changes in the Income Tax brackets, the exemption limit finally saw an increase from BRL 1,903.98 to BRL 2,112.00.

In addition to the above deductions, a simplified monthly deduction of 25% on the total exemption value may be applied alternatively if it is more beneficial to the taxpayer. Thanks to this, workers earning up to BRL 2,640.00 per month (currently corresponding to two minimum wages) will be covered by the exemption.

It is worth pointing out that the minimum wage has recently been raised by the government to BRL 1,320.00 as of May 1st (see here).

Impacts as of 2024

For reporting purposes, the new rule will only apply to income tax returns filed in 2024 for calendar year 2023.

Tax support for individuals

Domingues e Pinho Contadores has a department dedicated to assisting individuals in their tax demands, especially for complex and specific situations, such as those pertaining to assets and earnings from abroad, offshore companies, variable income and so forth. To rely on our support, please contact us at: dpc@dpc.com.br.