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In line with recent economic indicators, tax authorities have announced a 3.88% adjustment to the progressive rate scale for calculating the Income Tax (ISR) for individuals, effective for the 2025 fiscal year. This adjustment aligns with the year-over-year variation in the Consumer Price Index (CPI), as reported by the Central Bank of Honduras (BCH) on January 2, 2025.
What does this adjustment entail?
- Update of Income Thresholds
- The progressive rate scale used to calculate the amount of ISR payable by individuals will be modified to reflect the 3.88% increase in the CPI. This means that the income brackets subject to taxation will rise by 3.88%, aiming to preserve taxpayers' purchasing power amid inflationary pressures.
- Impact on Taxpayers
- Individuals whose income is near the thresholds of each tax bracket may benefit by remaining in a lower tax band than they would have without the adjustment. This effectively reduces their relative tax burden in inflationary contexts.
- Maintaining Fiscal Balance
- This adjustment is part of the annual measures designed to ensure that tax collection does not place disproportionate pressure on citizens' incomes, particularly in a dynamic economic environment.
Basis for the Adjustment
The Consumer Price Index (CPI) is a key indicator that measures the average variation in the prices of goods and services in the country. The BCH, as the entity responsible for publishing the CPI, reported a year-over-year increase of 3.88% at the close of 2024. This figure underpins the adjustment to ISR brackets for the upcoming fiscal year.
Benefits for Taxpayers
This update adheres to the principle of tax fairness, recognizing the impact of inflation on citizens’ real income. The adjustment shields taxpayers from a higher tax burden caused by nominal income increases that do not reflect a real improvement in their purchasing power.
Citizens are encouraged to review the updated tables published by the tax administration to understand how these changes may affect their tax obligations for the 2025 fiscal year. Additionally, companies and individuals are advised to keep their tax planning up-to-date based on these new parameters.
This adjustment reaffirms the authorities' commitment to an equitable tax policy that reflects the country’s current economic conditions.
You may access Agreement Number SAR-07-2025 by clicking here.
