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New 2022 IRS rates mean many ‘do not suffer any changes’

NEW 2022 IRS RATES MEAN MANY DO NOT 'SUFFER ANY CHANGES'We already knew that next year the IRS levels would increase from the current seven brackets to nine. Also, that the third and sixth tiers would be split and tax rates be changed. What was not known for sure was who won and who could lose under this new rearrangement.

The new IRS rates, delivered to parliament on Monday, confirm that the current seven levels of the IRS will change to nine, changing the amount of tax to be paid for many taxpayers.

The IRS table to be applied to 2022 income contains nine tax brackets, two more than previously. The Government has chosen not to update the inflation rate forecast for 2022, or change the first two income tax brackets, where the overwhelming majority of households are located, although they represent a small percentage of total income.

The majority of taxpayers, 72% of the 5.4 million families that file a tax return, and 53% of the 3 million households that pay some tax, are told they “do not suffer any change in the IRS.”


New 2022 IRS rates mean many do not 'suffer any changes'.


New 2022 IRS rates mean many do not 'suffer any changes'.


Note: The amount of taxable income, when greater than €7112, is divided into two parts, as follows: one, equal to the limit of the highest of the brackets that fits, to which the rate in column B corresponding to that bracket applies ; the other, equal to the surplus, to which the rate in column A applies for the next higher step.

However, simulations below clarify the doubts. From the third tier onwards, taxpayers are saving money, without exception (including those who earn the most and are in the lower tier). The most significant savings in the IRS will be achieved in the highest levels – the seventh and eighth levels.

In other words, taxpayers with lower incomes “do not suffer any change” (but some may even be slightly harmed by the fact that the Government has not updated these brackets at the rate of inflation), but the rest pay less tax.

New 2022 IRS rates mean many do not 'suffer any changes'.


Original article available in Portuguese at http://postal.pt/