Individuals will have a greater reduction in income tax according to the number of family obligations. Therefore, any additional charge is equivalent to a higher amount deducted from this tax.

The current cut is 10% and 20% of personal expenses that were limited to seven basic baskets, about $5,000. A 10% reduction was achieved by those who reported an annual income of more than USD 25,000, and a 20% reduction by those who had less than that value. Now the reform foresees a reduction of 18 percent, but the upper limit of expenses and reduction varies depending on family obligations.

The government announces an immediate reduction in income tax

For example, a person who earns $1,900 and whose annual taxes are $237 will pay zero even if they have no family responsibilities. While someone with a salary of $2,400 and paid $999 in income tax will pay $459 if there are no burdens, and if they have two burdens they will not have to pay anything more, according to cases prepared by the Tax Administration (SRI).

This new scheme is a proposal that the Government includes in the Organic Law for strengthening the family economy and which it will send to the National Assembly with the character of an economic emergency, that is, for processing within 30 days.

This proposal establishes three formulas for determining the maximum amount of reduction of this tax to which natural persons are entitled according to their personal expenses:

Income tax table in 2023 according to family obligations

number of fillings baskets upper limit of consumption markdown stop
0 7 $5362.97 $963.53
1 9 $6,882.39 $1238.83
2 eleven $8411.81 $1514.13
3 14 $10,705.94 $1,927.07
4 17 $13,000.07 $2340.01
5 or more twenty $15,294.20 $2752.96

The basic family basket that will be taken into account for this calculation is the one that corresponds to the month of January of the fiscal year for which the tax is paid, according to the data published by the National Bureau of Statistics and Censuses (INEC). In this case it is January 2023.

If the value of the discount applied exceeds the amount of income tax caused, no excess payment will be made for the difference and, therefore, will not create a right to a refund for the taxpayer.

Pet expenses are income tax deductible

In order to quantify the reduction in personal costs, the costs incurred by each dependent family can be taken into account. Parents, spouse or common-law partner and children up to 21 years of age or with disabilities of any age will be considered family obligations, provided that they do not generate taxable income and are dependents of the taxpayer.

In the event that two or more taxpayers have the same family obligations, they can be allocated according to their own discretion, but in no case may two or more taxpayers take into account the same family obligations for the reduction of personal expenses, explains the norm. .