Dahianna Jiménez for The Observer
Have the exemptions improved, or do we have to pay more?
Well, in the first instance, what all tax advisors do when the decree is published to update the income brackets is to compare them with the brackets of the previous tax year. This to see if in general we should pay more or less taxes.
So along the same lines, today we realize two important points:
- Salaried or pensioned persons, as well as legal entities, will have to pay more taxes (more details will be provided later).
- Individuals with lucrative activity will have a much higher exempt income bracket than in other periods (more details below).
Let's start analyzing the good news first
For those individuals with lucrative activity, the income tax exemption bracket is considerably increased from ¢4,094,000 to ¢6,244,000, i.e., if the individual had a taxable income of less than ¢6,244,000, he/she will not have to pay taxes.
This will mean that many taxpayers who previously paid taxes will not have to pay income tax in 2026.
But why did this change occur?
This was due to the approval of Law No. 10667, Law No. 10667 Law to reduce income tax for self-employed persons with lower income. Amendment of article 15, paragraph c) of Law 7092, Income Tax Law, of April 21, 1988.
This law was published in March of this year, so the benefits of this law would take effect as of 2026; however, we would have liked it to apply for this fiscal period.
Less encouraging news
For legal entities and salaried employees, pensioners and retirees, the exempted tax bracket was reduced. This was due to the fact that for the month of October of this year the consumer price index (hereinafter CPI) decreased by -0.38%. Therefore, the Treasury modified the parameters based on this.
Beginning with the case of salaried persons, the exempt bracket varied from ¢922,000 to ¢918,000, as well as the base reductions in all other brackets.
As an example: if you are a salaried employee and currently earn ¢922,000 per month... this year you did not have to pay income tax.
But as of 2026, a rent of ¢400 per month must be paid; that is, ¢4,800 of taxes per year, plus the other normal payroll charges.
In the case of legal entities, the amount of gross income to apply the progressive scale lower than 30% went from ¢119,629,000 to ¢119,174,000.
This means that for that difference of ¢455,000 your company could be classified at a rate of 30%. This instead of the progressive tax scale that goes from 5% to a maximum of 20%. I share with you the comparative table for your respective analysis and projections.
Can it be benefiting us at this time?
So, being totally honest and taking into account the reality of the market, many of us might think that these reductions might not be in line with the needs of our families. And that perhaps we have not been able to evidence a very significant variation.
However, according to data obtained by INEC from January to September a cumulative variation of -1.95%. And for the progressive scale, only October's variation was used, which was -0.38%, something that may be benefiting us at this moment.