Understand how the new INSS table works for the private sector

New Social Security rates have been in effect since March 1, affecting the payroll calculation

Leonardo Bezerra

As of March 1, the Social Security contribution rates paid by employees became progressive, in compliance with the provisions of the Social Security Reform (Constitutional Amendment 103).

The change affects workers with a formal contract and who are part of the General Social Security Regime (RGPS).

The new rules are valid for employed taxpayers, including domestic workers, and for single workers. There is no change for the self-employed (individual taxpayers), as service providers to companies and for optional policyholders.

Thus, private initiative workers will already have the INSS discount calculated in March, based on the new contribution table, adjusted according to the definitions of Ordinance No. 914/2020. In the new modality, progressive rates are applied to each remuneration range, similarly to the calculation of Income Tax.

INSS rates

Table valid until February 29,2020

 

Salary	Rate
Until  R$ 1.830,29	8%
From R$ 1.830,30 to R$ 3.050,52	9%
From  R$ 3.050,53 to R$ 6.101,06	11%

 

Table valid from March 1, 2020 onwards:

Contribution Salary	Progressive rate
Until R$ 1.045,00	7,5%
From R$ 1.045,01 to R$ 2.089,60	9%
From R$ 2.089,61 to 3134,40	12%
From  3.134,41 to 6.101,06	14%

It was also defined by the government that the contribution salary may not be less than R$ 1.045,00 (minimum wage) or greater than R$ 6.101,06 (ceiling).

According to the new rules, those who earn less pay lower rates. In turn, whoever earns more, pays more. As the incidence of the contribution will be by income brackets, it is necessary to make a calculation to know what the effective rate will be. How to achieve this result has been a point of doubt for many companies.

For example: now, those who receive a minimum wage per month (R$ 1.045,00) pay 7.5% of this amount. The worker who receives the INSS ceiling (R$ 6.101,06), pays an effective rate of 11.69%, which is the result of the sum of the different rates on each salary range.

How to calculate the effective rate

As the system is progressive, the rates will respect each remuneration range. See the demo:

As the system is progressive, the rates will respect each remuneration range. See the examples below:

Example 1: Salary R$ 1.500,00
Previous Rule	Actual Rule
Effective rate 8%	Calculation of the rate 7,5% above R$ 1.045,00(R$ 78,38) + 9% above R$ 455,00 (R$ 40,95)
Discount at Payroll R$ 120,00	Discount at Payroll R$ 119,33 = 7,96% of salary (effective rate)

Exemple 2: salary R$ 3.000,00
Previous Rule	Actual Rule
Effective rate 9%	Calculation of the rate 7,5% above R$ 1.045,00 (R$ 78,38) + 9% above R$ 1.044,60 (R$ 94,01) + 12% above R$ 910,40 (R$ 109,25)
Discount at Payroll R$ 270,00	Desconto em folha R$ 281,63 = 9,39% of salary (effective rate)

Another way to perform the calculations to reach at the result is to consider the predetermined values in the last column below (portion to be deducted from each range):

From	To	Rate	Portion to be deducted
-	1.045,00	7,5%	-
1.045,01	2.089,60	9%	15,68
2.089,61	3.134,40	12%	78,36
3.134,41	6.101,06	14%	141,05

INSS discount calculator

Above, the calculation method is demonstrated. But, those who just want to reach the final result while still having a comparison between the previous rule and the current one, we can use the calculator developed by Domingues e Pinho Contadores.

Enter the gross salary amount to compare.

INSS discount calculator for private sector employees.

Payroll: advice makes the difference

This is yet another change that affects the way payroll is generated. To keep up with current legislation, companies need to adjust their calculation systems, which requires attention, but it is not a complex task.

However, the payroll management work is much broader and consumes a large number of hours. Therefore, outsourcing the treatment of this service is the solution that brings operational and financial benefits.

Domingues e Pinho Contadores offers guidance to comply with all personnel department routines, including payroll processing in compliance with the laws and with the agility and discretion required by this activity.

Also see: Payroll review: strategy for risk prevention and cost reduction