MP 1172/23 - MINIMUM WAGE ADJUSTMENTS AND INCOME TAX TABLE
By Luiz Carlos Benner
MP 1172/23 was approved on 08/08/2023 by the joint committee and will now go to the plenary of the Chamber for analysis.
If the MP is approved, the minimum wage will reach R$ 1.614,00 in 2026. An adjustment of around 22% in relation to the minimum wage in 2023. In practice, we are talking about inflation adjustment and, perhaps, if the inflation remains low in the coming years, some real readjustment.
Despite the great impact of the minimum wage readjustment, above all, for those pensioners and retirees whose income is limited to that amount, it is the readjustment of the Income Tax table that deserves our attention, after all, if we do not correct the table, we will see soon, the minimum wage will be taxed by the Income Tax.
As already disclosed 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 income for wage earners in Brazil.
Between 2016 and 2022 there was no correction of values, maintaining the exemption limit of R$ 1.903,98, while 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 failure of the past, as well as the readjustment proposed in MP 1172/03. The taxpayer is seeing his income being consumed by the Income Tax, year after year.
When analyzing the gap in the Income Tax table, it is very clear that it is the lowest-income taxpayer who ends up being most affected. The correction of the Income Tax table is necessary and urgent, but we know that this readjustment will mean a reduction in revenue and will come with compensatory measures for this revenue loss.