Income Tax 2025: Understanding the Progressive Table

When an employee is promoted and moves into the "27.5% Income Tax" bracket, they often panic, believing that the IRS will confiscate almost a third of their total salary. This is the biggest legend about the IRPF table.

Brazil uses a progressive and marginal tax table. This means that the high rate only affects the portion of your salary that exceeds the band limit, not your entire salary.

The Dynamics of Marginal Strips

Think of tax brackets as “buckets.” Your gross salary is dumped into the Exemption Bucket first. The money that fits there pays 0% tax. The remainder falls into the second bucket (which charges 7.5%). The remainder of the second bucket falls to the third bucket (15%), and so on.

Therefore, even someone who earns $ 20.000,00 e atinge a faixa máxima de 27,5%, ainda tem a sua primeira faixa de renda totalmente isenta, a segunda pagando 7,5%, e assim por diante. Apenas o que ultrapassa os $ 4,664.68 is charged 27.5%.

The Portion to Deduct

To facilitate the accounting calculation and avoid having to use the bucket method monthly, the Federal Revenue Service stipulates the "Portion to Deduct".

The official mathematical calculation is made by multiplying your entire net salary (after taking out the INSS) by the rate it falls under (e.g.: 27.5%), and then subtracting the corresponding portion to be deducted from the official table (e.g.: $884.96). The result of this calculation is exactly the same as the progressive calculation by bands.

Dependents and Deductions

If you have dependents (children, spouse), pay judicial alimony or use the new official simplified deduction, this amount is deducted from your salary before it goes through the table, reducing the calculation base.

To avoid getting lost between the ranges and installments to be deducted, check your tax in seconds on our 100% updated IRPF Income Tax Calculator.