Impacts of the Individual Income Tax Declaration on the Budget of Lower-Middle-Class Families in Brazil

Elizama Debora dos Santos; Izabella Maria da Silva Viana

DOI: 10.22167/2675-6528-202602869

Article derived from a Course Conclusion Work (TCC), with content based on the student’s original work and adapted to the editorial format of the E&S Magazine with the support of the ResumeAI tool, an artificial intelligence solution developed by Instituto Pecege for textual synthesis and organization.

Summary

The Individual Income Tax (IRPF) had a direct impact on the budget of Brazilian families, especially those in the lower-middle class, where income reductions could compromise essential expenses. The study analyzed the impacts of the IRPF Declaration on these families’ budgets, highlighting the role of the accounting professional as an agent for tax guidance, prevention of tax inconsistencies, and mitigation of financial impacts arising from the complexity of legislation. The research was characterized as an applied study of a qualitative and exploratory nature, which allowed for close contact with the reality of taxpayers and a deep understanding of the difficulties faced with the IRPF, based on the analysis of real cases. The results obtained showed that the financial impacts observed in the analyzed families were not exclusively due to the incidence of the IRPF, but mainly due to operational failures, lack of knowledge of tax rules, and absence of specialized technical support. In all cases studied, the accounting professional’s performance proved relevant for the regularization of tax obligations, the reduction of tax risks, and the preservation of families’ financial resources, also contributing to tax education and more conscious financial decisions.

Keywords: Lower middle class; Table lag; Tax education; Financial planning.

1. Introduction

Taxation in Brazil has a long history, with roots in the colonial period, but the Individual Income Tax (IRPF), in its modern configuration, emerged at the beginning of the 20th century, with milestones such as Law No. 4,625 of 1922. Initially, its application faced resistance due to the lack of habit of declaring income. Over time, the system evolved, and the creation of the Cadastro de Pessoas Físicas (CPF) in 1968 brought greater control, allowing the Federal Revenue Service to efficiently cross-reference information. Currently, the IRPF is structured under the principle of progressivity, aiming for those with greater economic capacity to contribute proportionally more, although the system is still perceived as complex, even with technological advancement.

The IRPF exerts a direct and significant impact on the budget of Brazilian families, especially those classified as lower-middle class. For this group, any reduction in disposable income can compromise the ability to cover essential expenses. The complexity of the national tax system, combined with the accumulated lag in the progressive table, contributes to a disproportionate tax incidence on income intended for family subsistence. This situation is aggravated by the lack of knowledge of tax legislation by many taxpayers, which prevents them from taking advantage of legal deductions and leads them to make errors in filling out the declaration, generating avoidable financial impacts, such as fines and delays in refunds.

The principle of ability to pay, which should guide taxation, is compromised by the lack of regular updates to the progressive table of the Personal Income Tax (IRPF). Accumulated inflation since 1996, exceeding 140% according to data from the National Association of Federal Revenue Tax Auditors (ANFIP, 2024), has resulted in the taxation of millions of Brazilians without a real increase in their income. Jacob (2021) argues that this lag prevents the tax from fulfilling its constitutional purpose, excessively burdening lower-income taxpayers and inverting the logic of progressivity. Although Bill No. 1.087/2024 foresees the expansion of the exemption bracket and the reduction of rates, these changes will only take effect for the calendar year 2026, with effects in 2027, meaning that lower-middle-class families will still face the complexities of the current system in the coming fiscal years.

In this scenario, the knowledge gap and the need for tax guidance become evident. Personal tax planning emerges as an essential tool for financial management and error prevention, being defined by Prado (2013) as the organization of finances for the legal reduction of costs. The accounting professional assumes a fundamental role as an agent of tax guidance, mediating the relationship between complex tax legislation and the taxpayer (Prado, 2013; Machado, 2014). Their work goes beyond filling out the declaration, encompassing tax education and the identification of deduction opportunities, which is crucial for income preservation and the economic stability of families.

Given the persistent complexity of the Brazilian tax system and the need for tax education for the lower middle class, this study seeks to analyze the impacts of the Individual Income Tax Return on the budget of lower middle-class families, highlighting the role of the accounting professional as an agent of fiscal guidance, prevention of tax inconsistencies, and mitigation of financial impacts arising from the complexity of tax legislation.

2. Material and Methods

This research was characterized as a study of an applied nature, seeking to generate practical knowledge to optimize families’ financial planning. A qualitative, exploratory approach was adopted, which allowed close contact with taxpayers’ reality and a deep understanding of the difficulties faced with Individual Income Tax (IRPF). This methodological choice was fundamental to investigating how professional guidance influences the prevention of fiscal risks and the preservation of the family budget.

The research strategy consisted of the analysis of real cases, selecting four lower-middle-class families. The choice of these analysis units occurred intentionally, with the objective of representing distinct situations experienced by taxpayers while fulfilling their tax obligations. The participants were residents of the State of São Paulo, and the situations analyzed were observed by the author during her professional practice.

The cases were selected for presenting different triggers related to Personal Income Tax/ Income Tax On Individual [IRPF], such as omission of income, operational errors in declaration transmission, lack of knowledge of legal deductions, and difficulties in interpreting legislation. The personas analyzed were used for illustrative purposes, serving as a tool to demonstrate the financial impacts arising from the absence or presence of professional guidance. The tax years covered in the cases were 2024 and 2025.

For the collection of data from the case studies, a documentary analysis of the IRPF declarations and related fiscal documents was carried out, as well as the observation of taxpayers’ interactions with the tax system. Tools such as the Program Generator for Withholding Income Tax Return (DIRPF) and the Federal Revenue application were used, which are the official means for filling out and transmitting the declarations, to understand the procedures and inconsistencies.

Additionally, to complement the understanding of taxpayers’ perception, data were collected through a survey conducted by the author in 2025, using the Google Forms platform. This survey sought to capture taxpayers’ expectations and understanding regarding the mandatory filing of the IRPF – Individual Income Tax for the calendar year 2025, with effects in the fiscal year 2026, especially concerning recent changes in the exemption bracket.

The data analysis technique employed was case analysis, where each situation was examined individually to identify the procedures adopted, fiscal inconsistencies, and resulting financial impacts. The data were organized into illustrative profiles, which allowed for the demonstration of the relevance of professional guidance in regularizing tax obligations and mitigating fiscal risks. No advanced statistical analyses or formal thematic coding were performed.

As a limitation of the study, it should be noted that the research was conducted with only four case studies, selected for convenience. This approach restricts the possibility of generalizing the results to the entire Brazilian population. The analysis focused on specific taxpayers in the State of São Paulo and on situations observed by the author during her professional practice, which may influence the representativeness of the scenarios.

3. Results and Discussion

The analysis of the results of this research, based on four case studies, offers an in-depth understanding of the impacts of the Individual Income Tax Declaration on the budget of lower-middle-class families. The illustrative taxpayer profiles, selected for convenience, allowed us to demonstrate how professional guidance is crucial for error prevention, tax regularization, and the preservation of family financial stability. The findings reveal that the challenges faced by these taxpayers are not limited to the complexity of the legislation, but also involve a lack of knowledge of the rules and the absence of specialized technical support, which can generate significant and avoidable financial losses.

The research showed that the financial impacts observed in the analyzed families did not stem exclusively from the incidence of Income Tax, but mainly from operational failures, lack of knowledge of tax rules, and absence of specialized technical support. In all scenarios studied, the performance of the accounting professional proved indispensable for the regularization of tax obligations, the reduction of tax risks, and the preservation of families’ financial resources. This qualitative and exploratory approach allowed for close contact with the reality of taxpayers, revealing the difficulties and the importance of tax education for more conscious financial decisions.

Case Study Analysis 1: Omission of Social Security Income

The first case analyzed involved a taxpayer with an employment relationship and retirement benefits, who, in the fiscal years 2024 and 2025, declared only salary income, entirely omitting social security benefits. This omission resulted in the declaration being retained in fine-mesh audit by the Federal Revenue Service, which detected the inconsistency through the cross-referencing of information with the paying sources. The original declaration, without the inclusion of retirement income, showed a total of taxable income of R$ 35,611.99, with tax due of R$ 428.09 and tax to be refunded of R$ 37.43.

The professional intervention occurred only in the fiscal year of 2025, when the debt referring to the calendar year of 2024 was already due and past the deadline for ordinary installment payments. After the rectification, the fiscal scenario was drastically altered: what was previously an undue refund turned into a substantial tax payable. The rectified declaration, with the inclusion of retirement income, revealed a total of taxable income of R$ 51,379.99, with tax due of R$ 2,387.31 and a balance of tax payable of R$ 1,921.79, to be paid in eight installments of R$ 240.22.

The financial impact was aggravated by the incidence of late payment fines and interest, in addition to the loss of the opportunity for a smooth installment plan. The accountant’s action was strategic to consolidate the debts of both fiscal years into a single installment plan, diluting the tax liability into unified monthly installments. This measure, while maintaining the financial burden of the charges, allowed the taxpayer to honor the commitment without severely compromising their livelihood, a challenge in a country where 79.3% of families are in debt, according to data from the CNC (2022).

This scenario illustrates the importance of tax planning as an extension of personal financial control. The lack of fiscal education and ignorance about the taxation of multiple incomes can turn an annual obligation into a factor of budgetary imbalance. The accountant’s role, in this context, transcends the simple filling out of the declaration, functioning as an agent of fiscal education that helps families interpret tax law in their favor, preventing withholding tax from becoming an obstacle to domestic liquidity at the time of the annual adjustment.

Case Study 2 Analysis: Incorrect Declaration Rectification

The second case involved a taxpayer who, when trying to submit the 2025 declaration, improperly corrected the 2024 declaration through the Federal Revenue’s app. The error, resulting from a lack of attention in choosing the base year and the use of incorrect data, generated discrepancies and system lockouts. After multiple correction attempts, the maximum number allowed by the platform was exhausted, blocking the declaration and requiring in-person assistance from the Federal Revenue to unblock the system.

The Federal Revenue notification requested the refund of R$ 330.40 of improperly received refund, plus R$ 29.93 in late payment interest, totaling R$ 360.33. This case highlights the risks of changes made without technical guidance, as well as the financial impacts arising from late and inconsistent corrections. The false sense of autonomy, common in the era of tax digitalization, led the taxpayer to confuse fiscal years and exhaust rectification attempts, turning a technological tool into a severe bureaucratic obstacle.

The analysis of this case highlights the fundamental role of the accountant. The Federal Revenue’s application should be understood as a tool for transmitting information, not as an infallible guide. The system’s freezing and the need for in-person assistance demonstrate that digital errors generate practical consequences and real time loss. The accountant’s performance, in this context, went beyond the simple correction of data, configuring itself as crisis management and a guarantee of legal security, by promoting the “unblocking” of the taxpayer’s fiscal citizenship.

After the technical analysis, it was possible to identify and cancel the incorrect rectifications, reestablishing the original declarations and resending the correct data within the legal deadline. The taxpayer expressed an awareness of the relevance of specialized advice, indicating that she would adopt, permanently and exclusively, the practice of preparing her future tax declarations with the technical support of a qualified accounting professional. The client’s satisfaction after the regularization of the tax situation, perceived as quick and efficient, reinforces the importance of specialized technical support, even in the face of guidance from the Federal Revenue Service for in-person service.

Case Study Analysis 3: Non-Utilization of Legal Deductions and Inadequate Tax Strategies

The third case analyzed refers to a retired taxpayer who, under the promise of a “tax strategy” to elide tax payment, hired a supposed specialist. The analysis revealed serious technical errors, such as the undue inclusion of retirement benefits in the “Exempt and Non-Taxable Income” section, neglecting the fact that the taxpayer was not yet 65 years old, a legal requirement for partial exemption. Furthermore, there was the fraudulent insertion that the declarant was a person with a disability, aiming for classification under an exemption scenario without factual basis.

These inaccuracies artificially altered the calculation base, resulting in an undue refund of R$ 49.61, according to the original declaration. After cross-referencing data with the paying sources, the Federal Revenue Service flagged the declaration for fiscal audit. Despite alerts via e-CAC, the provider proceeded with successive erroneous rectifications, worsening the tax liability and generating new inconsistencies in the system. The Federal Revenue Service’s notification, regarding the taxation of income and denial of exemption for serious illness, highlighted the divergence between the declaration and current legislation.

The regularization only occurred after the intervention of a qualified accounting professional. The correction of the data reversed the refund scenario to a tax payable of R$ 2,878.61, plus fines and late interest, on a total of R$ 51,683.35 in taxable income and R$ 3,329.20 in tax due. The immediate financial impact was significant, with a variation of R$ 426.04 compared to the originally planned amount, added to the installment charges. The installment plan of eight quotas of R$ 359.82 was formalized, but the previous error generated an unforeseen monthly obligation, negatively impacting the family budget.

In the end, by the close of 2025, the taxpayer was unable to maintain the installment plan of 18 quotas, resulting in the termination of the administrative agreement due to nonpayment. The interruption of payment led to the registration of the debt in the Union’s Active Debt, subjecting the individual to severe sanctions, such as tax enforcement, asset seizure, financial asset blocking, and CPF restrictions. This scenario corroborates the premise that the apparent ease of digital tools and technological advancement, such as the pre-filled declaration, do not overcome the need for specialized technical knowledge, as argued by Fachini and Behr (2023).

The attempt to use “tax strategies” without legal support, such as undue exemption for those under 65 or false declaration of disability, constitutes a very high risk that falls directly on the taxpayer’s CPF. In this context, the accountant acted as a financial manager by consolidating the tax liabilities of two fiscal years, preserving budgetary viability and promoting tax regularization. The provision of tax data to third parties involves the transfer of full access to the taxpayer’s financial assets, and the reliability and technical rigor of the accounting professional are decisive for tax compliance.

Case Study Analysis 4: Inadequate Choice of Taxation Model and Preventive Planning

The fourth case analyzed represents a positive counterpoint, involving a taxpayer who maintains annual accounting follow-up and carries out preventive tax planning. All declarations were prepared based on efficient documentary organization, prior verification of income statements, and correct application of legal deductions. The taxpayer filed declarations without any fine mesh or fiscal inconsistency in the 2024 and 2025 tax years, obtaining regular refunds in both years.

The positive result was achieved due to adherence to good accounting practices, such as the complete registration of medical expenses and those for dependents, in addition to the adequate choice of the most advantageous declaration model. For the 2024 tax year (calendar year 2023), the Legal Deductions model resulted in a refund of R$ 2,006.92, with an effective rate of 8.45%, while the Simplified model would present R$ 1,585.24, with an effective rate of 8.97%. For the 2025 tax year (calendar year 2024), the Legal Deductions model generated a refund of R$ 2,009.68, with an effective rate of 9.89%, higher than the R$ 1,372.11 and 10.59% of the Simplified model.

The appropriate choice of declaration model directly impacts the value of the refund or the tax due, reinforcing the importance of technical guidance in selecting the most advantageous tax system. Personal tax planning, in this scenario, functions as an extension of domestic financial control, focusing on the full utilization of legal deductions to maximize the refund or reduce the tax payable. Table 2 of the original TCC details the main deductions, such as R$ 2,275.08 annually per dependent, R$ 3,561.50 annually per person for education expenses, up to 12% of Gross Taxable Income for pension (PGBL) in the complete model, and health expenses without a value limit.

The success of this case lies in the anticipation and trust placed in a qualified professional with active registration in the Regional Council of Accounting. The main benefits include the reduction of operational concerns, financial efficiency, legal and ethical security, and continuous tax education. Regular accounting follow-up transforms Income Tax from an annual problem into an asset management process, ensuring the family’s economic sustainability and reducing the risks of future tax assessments (Prado, 2013; Machado, 2014; Silva et al., 2021; Maia, 2017).

Tax education and the accountant’s role in guiding the taxpayer

Tax education is an essential element for strengthening citizenship and for the adequate fulfillment of tax obligations. In a complex tax system like the Brazilian one, understanding the rules that govern taxation becomes a challenge for a large part of the population. In this scenario, the accounting professional assumes a relevant role by acting as a mediator between tax legislation and the taxpayer, contributing to broadening the understanding of tax rules and guiding on the correct fulfillment of tax obligations.

Ricardo Alexandre (2025) highlights that the Brazilian tax system presents high normative complexity, which hinders understanding by taxpayers and reinforces the importance of specialized professionals to correctly interpret and apply tax rules. The accountant not only performs technical activities but also exercises an educational function by guiding taxpayers on their fiscal rights and duties. Sabbag (2023) complements that knowledge of tax regulations is fundamental to avoid mistakes in the calculation and fulfillment of fiscal obligations, and the lack of access to this information increases the chances of errors and unintentional non-compliance with legal norms.

Furthermore, the accounting professional plays an important role in disseminating tax education by guiding taxpayers on the correct use of benefits and deductions provided for in the legislation. Martins (2021) observes that knowledge of tax regulations allows the taxpayer to exercise their rights legitimately, ensuring greater balance in the relationship between the State and the citizen. Thus, accounting advisory contributes not only to the correct fulfillment of tax obligations but also to the strengthening of the culture of tax responsibility in society.

The relevance of accounting advice becomes even more evident when analyzed from the perspective of the financial impact on the budget of lower-middle-class families. For this social group, small variations in disposable income can compromise domestic financial balance, as a large part of their income is allocated to essential expenses, such as food, housing, education, and health. The correct preparation of the Income Tax Return, with the proper identification of legal deductions and accurate completion of information, can directly contribute to avoiding financial losses resulting from errors or lack of knowledge of tax legislation.

Public perception and disinformation: the trap of the new exemption

Applied research confirmed that taxpayers’ lack of knowledge is one of the main factors generating errors, tax risks, and incorrect calculation of tax payable. This scenario intensified with the recent expansion of the exemption bracket for Individual Income Tax for monthly income of up to R$ 5,000.00, established by Law No. 15.270/2025. It was observed that many taxpayers began to mistakenly interpret that they would be exempt from filing the declaration in 2026 (calendar year 2025), disregarding the principle of periodicity and the non-retroactivity of tax law.

The data collected through a survey revealed a disparity between the expectation generated by exemption promises and the technical understanding of the validity periods. The confusion between “payment exemption” and “filing waiver” still constitutes a relevant risk factor for tax compliance, reinforcing the thesis that bureaucratic complexity is as impactful as the tax burden itself. Legal literature corroborates this diagnosis by stating that the application of tax law requires systematic and contextualized interpretation, and not just a literal reading of the legal text, as highlighted by Oliveira, Matos, and Bozza (2010) and Matos (1955).

In a survey on taxpayers’ perception regarding the mandatory nature of the 2026 declaration (referring to 2025 income), 64.3% of respondents believed they were exempt and would not need to worry about the tax, while 28.6% thought they would only pay on the excess of R$ 5,000.00. This empirical data confirms that misinformation directly translates into concrete fiscal risks, highlighting the fundamental role of the accountant as a qualified interpreter of tax legislation, acting as an agent of fiscal education, risk prevention, and promoter of legal certainty.

The Federal Revenue of Brazil, in an official broadcast held on March 16, 2026, on the occasion of the publication of Normative Instruction RFB No. 2.312/2026, recognized the impacts of recent changes in accessory obligations, especially with the extinction of the Declaration of Withholding Income Tax (DIRF). This obligation, which reported income paid to individuals and the respective amounts of income tax withheld at source, functioned as a relevant instrument for data cross-referencing and validation of information provided by taxpayers.

With the replacement of DIRF by systems such as eSocial and EFD-Reinf, information began to be transmitted continuously and decentralized throughout the year. Although it represents technological advancement, this change also increases the dependence on the correct provision of data by multiple sources. In this new model, inconsistencies in information sent monthly can directly impact the taxpayer’s declaration, increasing the risks of divergence and withholding in the tax mesh. The Federal Revenue highlighted recurring errors that can lead taxpayers to the fine mesh in the 2026 fiscal year (calendar year 2025), such as discrepancies in totalizers and income inconsistency.

Additionally, the tax administration emphasized that, although the pre-filled declaration represents an advance in terms of practicality and data integration, it is not exempt from errors, as it depends on information provided by third parties. Thus, any omissions or inconsistencies can be automatically replicated in the taxpayer’s declaration. Therefore, the responsibility for the review, validation, and correction of information remains entirely with the taxpayer, who must carefully review all data before transmission, under penalty of incurring fiscal inconsistencies.

In summary, the results obtained demonstrated that the financial impacts observed in the analyzed families did not stem exclusively from the incidence of Income Tax, but mainly from operational failures, lack of knowledge of tax rules, and absence of specialized technical support. In all cases studied, the performance of the accounting professional proved relevant for the regularization of tax obligations, the reduction of tax risks, and the preservation of families’ financial resources. In addition to contributing to tax compliance, the accounting professional plays an important role as an agent of tax education, assisting taxpayers in understanding their rights and duties before the tax authorities and promoting more conscious and efficient financial decisions, which directly addresses the central objective of this study.

4. Conclusion

This study analyzed the impacts of the Individual Income Tax Return on the budget of lower-middle-class families, highlighting the role of the accounting professional as an agent for tax guidance, prevention of tax inconsistencies, and mitigation of financial impacts. It was found that the observed financial impacts did not stem exclusively from the incidence of IRPF, but mainly from operational failures, lack of knowledge of tax rules, and absence of specialized technical support. The performance of the accounting professional proved indispensable for the regularization of tax obligations, the reduction of tax risks, and the preservation of families’ financial resources. In contrast, it was observed that preventive tax planning, combined with continuous professional guidance, resulted in tax compliance and optimization of refunds, evidencing the effectiveness of proactive management. The research also revealed that misinformation about the recent expansion of the IRPF exemption bracket generated misinterpretations, reinforcing the need for a qualified interpreter of legislation.

The main contribution of this study lies in highlighting the strategic role of the accounting professional as an agent of fiscal education and promoter of legal certainty, transforming tax complexity into an asset management opportunity for lower-middle-class families. However, the research, being a case study with a sample restricted to four profiles of taxpayers residing in the state of São Paulo, has limitations regarding the generalization of results to the entire Brazilian population. For future studies, it is suggested to expand the sample to different regions of the country and diverse socioeconomic profiles, allowing for more comprehensive comparative analyses on the impacts of Personal Income Tax/ Income Tax On Individual on the family budget and the contribution of fiscal education to more conscious financial decisions.

Bibliographic References

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Martins, 2021 [Referência completa não encontrada no documento original]

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PRADO, Eliane Cristina Pires. 2013. O papel e a atuação do contador tributário. Revista de Ciências Gerenciais 17(25): 119-131.

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Article originating from the Course Conclusion Work of the Specialization in Tax Management of the MBA USP/Esalq

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