Starting from January 2023 salaries, dependent workers will pay Irpef whose gross salaries exceed $404,062.36, according to the calculations of the Professional Council of Economic Sciences (CABA).
Then there will be a upper stretch with a moderate retention to be determined by the AFIP. Those exceeding this value will pay the profit in full, at rates close to or directly at 35%, because the salary floor does not apply to this group of employees. And the tax is calculated based on the Minimum Non Taxable (MNI) which is of a much lower value.
The amount of $404,062 comes from the update of the monthly minimum wage which was $225,937 a year ago due to the change in the RIPTE index (formal wage index) between October 2021 and the same month of 2022, which was 78.8385%. This is a lower adjustment for inflation.
Also the Non-Taxable Minimum is updated by the same percentage (MNI), other deductions and tax scales, according to tax legislation.
Unlike the MNI, the salary floor, which started to apply in 2021, has been adjusted on several occasions and since November, gross wages up to $330,000 are not covered by income tax. And those that exceed that amount and up to $431,988 have a moderate withholding.
The MNI and other deductions (for example for children under 18) are updated annually. And those who exceed the minimum wage, pay profits for the difference between their income and the MNI. That’s why there’s a leap in paying the fee for those who exceed the moderate section of the minimum wage.
Effective January 2023, the MNI will be $201,520.18 per month for single workers and $266,581.80 per month for those married with 2 children.
In case of self employedthe MNI is $169,381.19 per month and married with 2 children $ 239,864.60 per month.
Accordingly, second Gabriela Russo, President of the Professional Council of Economic Sciences“Although apparently this increase in the minimum wage has a positive impact on pocket money, it must be taken into account that inflation will cause a regressive effect since with wage increases it will be necessary to make new adjustmentsas happened during this year”.
However, Russo points out that the latest minimum wage adjustment was raised to $330,000, when RIPTE should have applied. It should have been $383,177.
With the 2023 Budget Law, the power of the Executive Power to update the Irpef wage threshold and the exemption from the Christmas bonus for employed workers was extended.
Meanwhile for those reached by Guadagno, even in January they will have an improvement in pocket money but then the monthly withholding will increase because, due to inflation and parity, the worker’s income will nominally increase while the MNI remains unchanged throughout the year.
How is this year going? these higher-paid workers will experience a drop in real income and pay even more in profits.
For this reason, tax official César Litvin argues that “due to inflationary dynamics, the full-year 2023 adjustment of the non-taxable minimum and personal deductions is “little” popular. And the distortions caused by the tax system will continue to occur. annual update and which requires from time to time the need to make patches of threshold increases and not resolve the tax situation of workers”.
“The solution is to have the deductions of the Non-Taxable Minimums and of the Family Expenses adjustable monthly and automatically by the CPI instead of the RIPTE, as well as the scales of the progressive rates”.
“Even self-employed workers should be equated to dependent employees. The former have a substantially higher tax burden without any justification for it,” concluded Litvin.
Charles Arterburn is a seasoned business journalist for News Rebeat, where he provides comprehensive coverage of the latest trends and developments in the world of finance and economics.