Income Tax 2023: how is it, deadline and who should declare?

During 2022, the possibility of new rules in the 2023 Income Tax was discussed, such as the change in the table used in calculating taxation.

The deadlines and possible changes for this year, however, will still be disclosed by the Federal Revenue, but the CNN answers below the main questions about how the IRPF and IRPJ will work, who should declare and other common questions.

How will the income tax return look in 2023?

One of Luiz Inácio Lula da Silva’s (PT) campaign promises was a possible reform of the Individual Income Tax (IRPF) with the expansion of the exemption range for those earning up to R$5,000.

But, in November, Senator-elect Wellington Dias (PT), responsible for reviewing the budget, said that the issue will be dealt with throughout the new government, that is, not necessarily this year.

The details of the changes to be implemented have not yet been released, and currently there is already a project to reform the IR in progress in Congress and which has already been approved in the Chamber, but is awaiting a vote in the Senate.

What will the Income Tax table look like for 2023?

It was speculated that the rate table would be readjusted in 2022, with a possible reform, but it has not yet happened. If there are no changes, the Income Tax table for 2023 should look like this:

Monthly income tax table

Calculation basis	Aliquot	Deduction
Up to BRL 1,903.98	free	BRL 0
From BRL 1,903.99 to BRL 2,826.65	7.5%	BRL 142.80
From BRL 2,826.66 to BRL 3,751.05	15%	BRL 354.80
From BRL 3,751.06 to BRL 4,664.68	22.5%	BRL 636.13
From BRL 4,664.68	27.5%	BRL 869.36

Annual income tax table

Calculation basis	Aliquot	Deduction
Up to BRL 22,847.76	Free
From BRL 22,847.76 to BRL 33,919.80	7.5%	BRL 1,713.58
From BRL 33,919.80 to BRL 45,012.60	15%	BRL 4,257.57
From BRL 45,012.60 to BRL 55,976.16	22.5%	BRL 7,633.51
Over BRL 55,976.16	27.5%	BRL 10,432.32

Understand table lag

The last correction in the Income Tax table was made in 2015, which means that it is currently out of date. Therefore, according to the rules in force today:

• Those who receive up to R$ 1,903.98 per month are exempt from Income Tax;
• Those who receive monthly between R$ 1,903.99 and R$ 2,826.65 pay a rate of 7.5%;
• Those who receive monthly between R$ 2,826.66 and R$ 3,751.05 pay a rate of 15%;
• Those who receive monthly between R$ 3,751.06 and R$ 4,664.68 pay a rate of 22.5%;
• Those who receive more than R$ 4,664.68 monthly pay a fixed rate of 27.5%.

According to a survey carried out by Unafisco, the table accumulates a lag of almost 135% and, if the table were fully corrected based on the accumulated inflation of recent years, those with monthly income of up to R$ 4,465 would be exempt.

Who needs to declare income tax in 2023?

In Brazil, there is a separation of Income Tax taxation between individuals and legal entities, therefore, there is the IRPF and IRPJ.

In the case of the IR for individuals, all those who earned income above R$ 28,559.70 in 2022 or who received more than R$ 40,000 in exempt, non-taxable or taxed income must file the 2023 Income Tax declaration at source.

See the other declaration requirements:

Income from rural activities

The requirements for filing the IRPF are annual gross income from rural activity in the amount above R$ 142,798.50 or compensation for losses from rural activity from previous calendar years or the calendar year itself to be declared.

Assets and rights above the limit

Another requirement is to present possession or ownership, within the deadline of December 31, 2022, of assets or rights, with a total value or greater than the limit of BRL 300,000, including bare land or rural property.

Investments

Anyone who has invested in stock exchanges, the futures market, goods and the like must declare the IRPF in 2023.

Others

In addition to the requirements, it is also considered the person who became a resident in Brazil in any month of the previous year.

And who doesn’t need to make the statement?

To find out if you do not need to file an income tax return in 2023, consider the following factors:

• Does not meet the minimum income requirements, including income from rural activity, goods and rights, investments and others;
• You are dependent on a statement submitted by another individual, in which your income, assets and rights and other data are informed;
• Had ownership or possession of assets and rights when they were declared by the spouse or partner, considering that the total value of their private assets does not exceed the limit on December 31st.

If you do not meet the above requirements, you do not need to make the declaration.

Income Tax Exemption Statement

In this form of taxation, in addition to the exemption factors mentioned above, there are other health conditions, which appear in the Law No. 7,713/88, in which the citizen may be exempt from paying and reporting tax. Are they:

• Occupational disease;
• Active tuberculosis;
• Mental alienation;
• Multiple sclerosis;
• Malignant neoplasm;
• Blindness;
• Leprosy;
• Irreversible and disabling paralysis;
• Severe heart disease;
• Parkinson’s disease;
• ankylosing spondyloarthritis;
• Severe nephropathy;
• Severe liver disease;
• Advanced stages of Paget’s disease (osteitis deformans);
• Radiation contamination;
• Acquired immunodeficiency syndrome, based on conclusion of specialized medicine.

What can be deducted in the 2023 Income Tax return?

A characteristic of this type of taxation is that the deductions can reduce the amount to be paid in the tax collection or increase the amount of the refund. This happens because of the division into two types of deduction: deductible expenses and deductions from the tax due.

• deductible expenses : decrease the IR calculation basis, reducing the amount to which the person must apply the tax rate. Examples of deductible expenses are amounts for medical expenses, dependents, education, contributions to the INSS and private pension plans.
• Tax deductions due : in this alternative, the deduction directly reduces the amount of tax to be paid. Donations and rent amounts are included, for example.

How to make the income tax return for individuals (IRPF)?

There are three options for making the Income Tax return for Individuals (IRPF). Check out what they are below:

• Statement Generator Program (PGD);
• Application My Income Tax for iOS or android;
• e-CAC portalwhich can be used on your computer through your gov.br account.

How to make the IR declaration for Legal Entity (IRPJ)?

The step-by-step procedure for declaring income tax in 2023 as a legal entity consists of:

• Access the website of IRS;
• Download and install the program on your computer Statement Generator in the updated version of the year to be declared;
• Log in with your registered data;
• Fill in the requested data from the company, considering the expenses and profit obtained in the calculation period;
• Submit the statement through the Receitanet program and the Federal Revenue website.

For entrepreneurs who want to avoid problems with errors in sending the return and calculating the tax, the ideal is to consider an accounting advisory service.

IRPF declaration deadline

The deadline and rules for declaring the IRPF in 2023 have not yet been released by the Federal Revenue.

In 2022, due to the pandemic, the deadline for declaration was until the last working day of May.

If you obligatorily need to declare, but sent after the deadline, the Fine for Late Delivery of Declaration (MAED) will be charged.

IR reform project

In September 2021, the Chamber of Deputies approved a project that changes the Income Tax rules (PL 2337/21).

Authored by the Executive Branch, the project establishes that profits and dividends will be taxed at 15% as Income Tax charged at source, but investment funds are outside the rule.

In addition, the Corporate Income Tax will be reduced from 15% to 8% and the Social Contribution on Net Income (CSLL) will decrease by 0.5 percentage points.

The bill also provides for a review of the Individual Income Tax table, changing the exemption range from the current R$ 1,903.98 to R$ 2,500 per month.

However, despite having already been approved in the Chamber, the project is still awaiting consideration in the Senate, without a defined deadline for the start of voting.

Posted by Thâmara Kaoru