Changes to the IRS coming in 2023 will mean that the €1,350 salary will be paid to the IRS €15 less in January and €25 less from July compared to what it pays in 2022.
These calculations are part of a series of simulations conducted by the Treasury based on new income tax tables that will apply between January and June 2023 and those that will come into effect on July 1 and include a new tax withholding model. .
According to the same simulation, a single person without dependents with a gross salary of €1,350 is currently deducting €219 through the IRS. In January, with the new withholding tables, the tax will be reduced to 204 euros, and from July it will have a new reduction, starting from a withholding of 194 euros.
If this person with these characteristics had a 5.1% salary increase in January (which would increase their salary to €1,419 gross per month), the IRS withholding tax would be €230 between January and June (resulting in a net salary of €1,189 ), declining from July to 213 euros (while the net salary of the IRS remained at the level of 1204 euros).
A single person with a dependent and a gross salary of €850 currently deducts €57 from the IRS. In 2023, this taxpayer will have a €20 relief starting in January, starting with a €37 deduction. In July, another change: the withholding tax is reduced to one euro.
The change will increase wages net of taxes from the current €793 to €813 in January and to €849 from July.
With a 5.1% increase in 2023, gross salary will rise to €893, with new withholding tables providing a net tax value (excluding social security discounts) of €834 in January and €871 from July.
This evolution of the deductibles (and therefore the net worth in case of maintaining or increasing wages) reflects two situations: on the one hand, the new withholding tables that will be valid from January 1 to June 30 and which are updated to take into account changes in the minimum and existence, updating the 5.1% brackets and reducing from 21% to 23% the marginal rate of the second IRS bracket provided in the State Budget for 2023 (OE2023).
On the other hand, the new model of income tax tables, which starts in July and follows the logic of the cap rate according to IRS levels, aims to avoid regressive situations.
“Once the new model is adopted, gross salary increases will always match net salary increases,” as opposed to what “has been seen in some situations with the current retention model,” the Treasury Department said in a statement.
This is what makes a dependent-married worker with a gross income of €2,500 a month that hasn’t been increased to support his income in the first half of the year by increasing his net income by €41 since July.
With a 5.1% salary increase, you will have a monthly profit of €75 until June and €120 from July.
Author: Portuguese
Source: CM Jornal
I’m Tifany Hawkins, a professional journalist with years of experience in news reporting. I currently work for a prominent news website and write articles for 24NewsReporters as an author. My primary focus is on economy-related stories, though I am also experienced in several other areas of journalism.