A proposal to amend Article 19-B of the Statute of Tax Benefits is under discussion.
Currently, the law stipulates that “for the determination of the taxable income of IRC taxpayers and IRS taxpayers with organized accounting, expenses corresponding to salary increases for workers with indefinite-term employment contracts are considered at 200% of their amount, accounted as a cost of the exercise,” when “the increase in the company’s average annual base salary at the year’s end is at least 4.7%, and the increase in the annual base salary for workers earning a value equal to or less than the company’s average annual base salary at the end of the previous year is at least 4.7%.”
After introducing this minimum threshold of 4.7% in the Budget for 2025, the Government now aims to update this benchmark, aligning with the reference established in social dialogue.
Thus, the Budget for 2026 proposal anticipates that companies will continue to have the IRC incentive next year if “the increase in the company’s average annual base salary at the year’s end is at least 4.6%” and “the increase in the annual base salary for workers earning a value equal to or less than the company’s average annual base salary at the end of the previous year is at least 4.6%.”
Regarding the global salary increase reference (discussed in collective bargaining), the agreement signed in October 2024 maintained the values foreseen in the previous government’s agreement (4.7% in 2025 and 4.6% in 2026).
For 2027 and 2028, it pointed to 4.5% in each of those years.
On September 19, the parliament approved, in general terms, a change to the rules of the tax incentive for salary appreciation, allowing companies to access the IRC deduction without the obligation to reduce wage disparities among workers.
