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The amount from which salaries and pensions begin to be deducted by the IRS in 2021 will increase to 686 euros per month, rising 27 euros compared to the 2020 limit, according to the new withholding tables published today.
In addition to the increase in the amount exempt from the monthly tax discount, the new tables published in the Diário da República reduce the withholding rate applicable to the different income brackets, in values between 0.1 and 0.9 percentage points compared to applied in 2020.
In the case of pensions, the retention tables are updated at the lowest levels, with a reduction in the applicable rates for monthly pensions up to 765 euros, which allows to accommodate and safeguard the net income of pensioners who will have an increase extraordinary of 10 euros.
At the press conference to present OE2021, the Undersecretary of State for Tax Affairs, António Mendonça Mendes, had indicated that the reduction in withholding rates at source would be a measure mainly aimed at work income where there is a greater mismatch between the tax withheld and the tax actually owed.
In the case of pensions, he said, “there is an almost perfect correspondence between what is the tax withheld and what is the tax paid.”
In a statement, the Ministry of Finance states that “the approximation between the withholding tax and the tax payable aims to increase the liquidity of families, especially middle class families and those whose income has been affected as a result of the pandemic crisis “and recalls that, as indicated in the State Budgets for 2021 (OE2021), this measure will leave around 200 million euros for families over the next year.
According to the new tables, a single worker without dependents will be exempt up to 686 euros, starting to retain, as of January, 4% if his salary is marked between 687 euros and 718 euros. In 2020, 0.1% is retained between 659 and 686 euros and 4.2% between 687 and 718 euros.
If this taxpayer (assuming the same family profile) has a gross monthly salary of 1,875 euros, the withholding rate will decrease by 0.4 percentage points, from 21.5% to 21.1%.
Receiving 5,500 euros per month, the lowering of the retention rate from the current 34.3% to 33.6%.
In the case of a couple, in which only one of the elements works, with a dependent, the IRS monthly discount drops from 1.00% to 0.9% as of January 2021 if you have a monthly compensation greater than 754 euros and up to 794 euros. Without children, this level of income begins to deduct 4.7% from the IRS instead of the current 4.8%.
Pensioners with pensions of up to 705 euros will discount 2.5% (compared to the current 2.6%) and up to 765 euros will discount 4.0% (currently they discount 4.3%).
In recent years, withholding tables have been published at the beginning of the year to which they refer, so the government order has to protect its retroactive application when employers and those who process pensions no longer have time. reflect them in salaries and pensions already paid.
On this occasion, with the availability of tables at the beginning of December, companies and entities that process pensions will have time to reflect the new withholding rates from January.
With the exception of the increase of 100 euros in the minimum stock and the VAT deduction for the invoice requirement in gyms and veterinarians, the IRS hardly changes in OE2021, with the Government opting to keep the limits of the seven levels of taxable income unchanged. , as well as the amount of the specific deduction and the collection deductions.
In this way, the reduction of the monthly withholding will translate in 2022 (when the annual income statement for 2021 is filed) in a lower refund or a higher tax bill compared to what will result from the campaign. of the IRS delivery in 2021, if the taxpayer maintains an identical profile of volume of income and expenses to be deducted.
Decrease in the IRS tables gives a saving of 0.69 euros in salary of 700
The IRS withholding tables for 2021 will lower the discounted amount by 0.69 and seven euros, respectively, a salary of 700 euros and 1,750 euros, indicate the simulations of the Ministry of Finance.
The dispatch with the IRS withholding tables that will come into effect during the next year was published today in the Diário da República, translating an increase from 659 to 686 in the value of salaries and pensions from which the IRS begins to deduct, and a reduction in the rates applicable to the different categories of income from dependent labor.
The objective of the measure, says the Ministry of Finance in a statement, is “to continue the action of recent years to blur the differential in the tax withholding tables where there is a greater gap between the amount of payments withheld and the final amount “. of the tax to be paid by dependent workers “.
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