Boosting Take-Home Pay By Exempting Most Employees From Income Tax

• Law Firm: WTW
• Subject Matter: Tax, Income Tax
• Author: Mariano Thompson
• Published date: 03 October 2023

In a bid to combat record-high inflation, Argentina temporarily raises the minimum income required for an employee to be subject to income tax, with considerations underway to make the change permanent.

Employer Action Code: Monitor

In advance of general elections in Argentina for the presidency and Congress in October 2023, Economy Minister (and presidential candidate) Sergio Massa announced a government decree to temporarily increase the minimum income threshold for personal income tax (PIT) liability so that 99% of employees will not be subject to income tax in the fourth quarter of 2023. The lower house of Congress has approved draft legislation to make the change permanent (effective January 1, 2024), and it is awaiting consideration in the upper house.

Key details

• The minimum income threshold for PIT will increase from 700,870 to 1.7 million Argentinian pesos per month (roughly equal to USD 5,000 at the time of the decree) as of October 1, 2023. Note: This new limit is based on 15 times the monthly minimum wage (SMVM - salario mínimo, vital y móvil).
• Under the draft bill to make the change permanent, the PIT system would be replaced by a 'schedular tax' system under which taxpayers would receive an income tax exemption on annual salaries (and pensions) of up to 180 times the SMVM, roughly equal to around USD 60,000...