Find out how much you can benefit from tax relief!

With the recent reduction in IRS ratesBy 2025, many taxpayers could see significant savings on their tax bill. These changes not only affect rates up to the 6th bracket, but also bring an increase in the specific deduction, providing an additional bonus. Now, understanding how these changes affect your particular case is crucial to making the most of the tax relief.

IRS Rate Reductions: An Overview

Firstly, IRS rates have been cut significantly, ranging from 0.25 to 1.5 percentage points. For example:

• 1st step: The rate fell by 0.25 p.p. to 13%.
• 2nd step: Down 1.5 p.p. to 16.50%.
• Grade 3: Down 1 p.p. to 22%.
• 4th step: Decreases by 1 p.p. to 25%.
• 5th step0.75 p.p. down to 32%.
• Grade 6Reduction of 1.5 p.p. to 35.50%.

Thus, these adjustments were designed to provide significant relief for a wide range of incomes, especially those in the lower and middle brackets.

How These Changes Could Affect Your Budget

Now to the figures. For a single worker without children:

• With a gross salary of €1,300the extra savings will be 102,79€.
• If the gross salary is 1.500€the additional relief reaches 130,79€.
• For a gross salary of €2,000the extra savings will be 194,35€.

These figures are even more significant for higher incomes. For example, a worker with a gross salary of €3,000 you can save more 372,24€while for a gross income of 5.000€the relief reaches 273,45€.

And for couples?

For couples, the savings can also be substantial. Let's consider a couple with two breadwinners, both earning €1,300 a month:

• The extra annual saving will be 205,58€.
• If both earn €1,500, the tax relief will be 261,57€.
• For incomes of €2,000 per month each, the savings amount to 388,70€.

If the couple has two children, the savings will be identical for the same income levels. This demonstrates the consistency of savings regardless of family composition.

Increased Specific Deduction: An Extra Bonus

In addition to the rate reductions, there is also an additional bonus due to the increase in the specific deduction. This deduction has risen from €4,104 to €4,350.24, representing an increase of 246,24€. This amount, when deducted from annual income, allows a direct reduction in the tax base, further easing the tax burden.

This increase means that more income will be exempt from tax, especially for employees and pensioners with incomes of up to €2,830 a month.

Retroactivity in Withholding Tax Tables

Another important point is that, as of September, the new withholding tax tables will reflect these changes, with retroactive effect to January 2024. This means that you'll be able to start feeling this tax relief in your monthly income in the coming months.

How Serro & Andrade Can Help

With so many changes, it's easy to feel lost. But don't worry, at Serro & AndradeWe're here to help you understand exactly how much you can benefit from this tax relief. With our vast experience in accounting and consultancy, we ensure that all our clients make the most of these changes.

Contact us today and make sure you're maximising your tax savings!