Income Tax: Provisional Decree adjusts progressive rates and raises exemption threshold

Starting in February 2024, individuals with incomes up to BRL 2,824—equivalent to two minimum wages—will be exempt from paying income tax

In a special edition of the Federal Official Gazette issued on February 6, the Brazilian government announced Provisional Presidential Decree No. 1,206/2024. The act raises the income tax exemption threshold to BRL 2,824 – two minimum wages –, starting from February 2024.

Until recently, the exemption was set for earnings up to BRL 2,640, which was equivalent to two minimum wages at the time. However, following a recent salary adjustment that increased the minimum wage from BRL 1,320 to BRL 1,412, individuals with incomes under two minimum wages faced potential taxation. The new decree was enacted to extend the exemption range in order to accommodate the wage increase, thus ensuring that individuals earning up to the new threshold are not subject to income tax.  

New adjustments in monthly progressive tax rates

Below are the new income tax rates and brackets for individuals, effective from February 2024:

Taxpayers earning up to BRL 2,824.00 per month will also qualify for an exemption, as the law provides for a further deduction of BRL 564.80 applicable to their earnings. Once this deduction is applied, monthly taxable income drops to BRL 2,259.20, which does not exceed the threshold of the zero-rate bracket in the new table.

It is important to note that this BRL 564.80 deduction is optional. Taxpayers eligible for larger deductions (such as those related to social security contributions, dependents, or alimony) will not compromise their ability to claim these deductions should they choose to file a comprehensive tax return instead.

Support for individual taxpayers

At DPC, we offer specialized support for individuals seeking guidance to ensure their tax compliance. Reach out to our team at: dpc@dpc.com.br.