MP 1172/23 - ADJUSTMENTS TO THE MINIMUM WAGE AND THE INCOME TAX SCHEDULE
By Luiz Carlos Benner
MP 1172/23 was approved on 08/08/2023 by the joint committee and will now be reviewed by the plenary of the Chamber.
If the MP is approved, the minimum wage will reach R$ 1,614.00 in 2026. An adjustment of around 22% compared to the 2023 minimum wage. In practice, we are talking about inflationary adjustment and, perhaps, if inflation remains low in the coming years, some real adjustment.
Despite the great impact of the minimum wage adjustment, especially for those pensioners and retirees whose income is limited to that amount, it is the adjustment of the Income Tax table that deserves our attention. After all, if we do not correct the table, we will soon see the minimum wage being taxed by Income Tax.
As already announced by the National Union of Tax Auditors of the Federal Revenue Service, in various media, the gap in the Income Tax table has already accumulated 134.52%. This already gives us an idea of the loss of wage earners in Brazil.
Between 2016 and 2022, there was no correction in the amounts, maintaining the exemption limit of R$ 1,903.98, while the inflation measured by the IPCA accumulated 44% in that same period. In 2023, the table was slightly adjusted, raising the exemption limit range to R$ 2,112.00. But this adjustment is far from correcting the past flaw, as well as the adjustment proposed in MP 1172/03. The taxpayer is seeing their income being consumed by the Income Tax, year after year.
When analyzing the gap in the Income Tax table, it is very evident that it is the lowest income taxpayer who ends up being harmed the most. The correction of the Income Tax table is necessary and urgent, but we know that this adjustment will mean a reduction in collection and will include compensatory measures for this collection loss.
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