Who benefits most from changes to the IRS?
Analysis reveals that changes to the IRS will benefit families with higher incomes.
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Changes to IRS with the State Budget for 2024: Benefit more families "with higher incomes"
According to analysis published by the Bank of Portugal (BdP), conducted by Sara Riscado, those who will benefit the most from the changes imposed on IRS by the State Budget for 2024 (OE) will be families "with higher incomes".
In other words, families with higher incomes will now pay less, based on a distributive analysis. source
"In distributive terms, these changes benefit relatively more individuals located in higher income brackets, since the impact of reducing tax rates - the most dominant in all income brackets - is increasing up to the ninth decile of the distribution," as read in the news shared by Notícias ao Minuto, citing the BdP.
These changes come from the OE2024, which "includes a reduction in the marginal rates of IRS (up to the 5th bracket), updating the tax brackets by 3% and updating the minimum existence in line with the minimum wage to be in force in 2024 (820 euros per month)", explains the BdP, in the edition of the section 'Economy in one image'.
What it means is that the changes "imply a decrease in the average tax rate from 15% to 14% and an increase of about 2% in the available income of families". It should also be noted that "although the increase in the minimum subsistence benefits individuals in the lower half of the distribution more, its effect is relatively modest when compared to the effects of measures on tax brackets and rates."
The analysis in question was carried out by Sara Riscado and is "the sole responsibility of the author and do not necessarily coincide with those of the Bank of Portugal or the Eurosystem," as stated on the website.
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