Legislative changes in the first month of the year will affect every Russian family
From January 1, legislators plan to enter into force a large number of important laws. The first month of the coming 2024 will provide indexation for pensioners, adjust the rules for receiving a number of social benefits, change the conditions for obtaining mortgages and tax deductions, and bring important innovations for schoolchildren, conscripts, and motorists. In general, we are unlikely to be mistaken if we assume that the January legislative changes will in one way or another affect every Russian family.
From January 1, the minimum wage (minimum wage) in Russia will increase to 19,242 rubles per month, which is 18.5% more than the current figure, which in 2023 was 16,242 rubles. This increase will improve the financial situation of citizens receiving wages at the minimum wage level. According to various sources, there are from 4 to 6 million of them in the country. The state has been pursuing a policy of rapid growth of the minimum wage of Russians for the third year in a row: in 2022, the minimum wage was increased twice — by 8.6% and 10%, and from 1 June 2023 it was increased by another 6.3%. According to the authorities, by 2030 the minimum wage in nominal terms should double.
“The increase in the minimum wage is quite significant and positive, according to at least two criteria. The first is in comparison with current inflation. The point is not so much that it will be more than double the average price increase of 7.5% expected in 2023. It is also higher than the observed inflation, which the Central Bank studies using social surveys of the population. For the next 12 months, expectations were 14.2%. Thus, the increase in the minimum wage exceeds not only the increase in prices recorded by Rosstat, but even the increase in prices expected by people themselves.
The second is the ratio of the minimum wage and the subsistence level. A working person should not receive a salary below the limit necessary for living. In 2024, it will increase for the working population to 16,844 rubles. Thus, the minimum wage will be 14.2% higher than the subsistence level. In 2023, this figure was only 3.7%. The rate of increase in this ratio by almost 4 times per year is very impressive.”
From January 1, the next changes regarding age will come into force retirement. This is the next stage of the pension reform launched in 2019. From 2024, men will retire at the age of 63, women — upon reaching 58 years. However, it will not be possible to receive a pension if by this time the employee’s work experience has not reached 15 years, and the number of pension points is less than 28.2.
But those who already receive an old-age pension will receive an increase in payments from the beginning of next year. The changes will affect all non-working pensioners, of whom there are more than 27 million in the country — payments for them will be indexed by 7.5%. The cost of one pension coefficient will increase to 133.05 rubles. The fixed payment to the old-age insurance pension will be 8134.88 rubles.
“Indexation of pensions should, of course, compensate for the impact of inflation on the cost of living. However, the effectiveness of this compensation depends on how accurately pension increases reflect changes in consumer prices. Inflation at the end of this year is expected to be 7.5%, which is exactly how pensions will increase. Quite fair and worthy. Meanwhile, indexation of pensions in a deficit budget environment is a complex task that requires a balance between social obligations and the financial stability of the state. In such a situation, the decision on the scale of indexation depends on economic stability. The level of inflation and the general economic situation influence the decision on the possibility of indexation, and a deficit budget may limit the ability to increase spending. In general, balancing interests between ensuring a decent standard of living for pensioners and the financial stability of the state often requires the authorities to make compromise decisions.”
A long-term savings program (LTS) for future retirees will be launched in January. PDS is a voluntary savings and savings product for citizens with the participation of the state. The project assumes the active independent participation of Russians in accumulating capital for retirement. To become a participant in the program, you need to enter into an agreement with a non-state pension fund (NPF) and deposit funds into the account. For three years, the state will add up to 36 thousand rubles annually. Those who make annual contributions under a long-term savings agreement in the amount of at least two thousand rubles will be able to count on state support. You can also receive a tax deduction for contributions up to 400 thousand rubles, returning 13% of contributions, but not more than the amount of personal income tax paid for the year, and within the limit for long-term investments, which in 2024 should be 52 thousand rubles. Citizens' deposited funds will be insured for the amount of 2.8 million rubles. Payments will become available after 15 years of participation in the program or from 55 or 60 years for women and men, respectively.
“In the adopted PDS mechanism, unfortunately, I did not see a mechanism for protecting savings from inflation. Tax deductions, state co-financing of contributions are wonderful, but the mass consumer in Russia is afraid, first of all, of rising prices, which can eat up half of their money over a relatively long (5-10-15 years) time period. Now, if long-term savings were invested in Ministry of Finance bonds with a floating coupon, which was guaranteed to cover the inflation rate, then it would be a different matter. But this is not in the program. Accordingly, there will be no mass participation of the population in the program: taking into account tax benefits, it can attract at most 2 million people. Meanwhile, Russians now have about 30 trillion rubles in their hands, according to the Central Bank. The state is trying to extract and use at least part of this huge amount of cash to its advantage. But first we need to offer people a truly effective way to protect their funds long-term.”
From the new year, amendments will come into force allowing you to maintain child care benefits for up to 1.5 years when leaving work early. The conditions for receiving a monthly payment for caring for a disabled child will also change, which parents or guardians who work on a part-time basis will now be able to receive.
Also, from January 1, the circle of persons entitled to allocate maternity capital funds for the formation of a funded pension, including men, is expanding. From January 1, maternity capital can only be received by those parents who were citizens of the Russian Federation at the time of the birth of the baby, who at the same time became a citizen of Russia by right of birth. Residents of new regions of the Russian Federation will receive the right to maternity capital, regardless of the basis and timing of their acquisition of Russian citizenship.
“The state is expanding the possibilities of using maternity capital, eliminating some imbalances in the issue of child care payments — this has been done for several years in a row. The country's authorities are addressing these issues in order to improve the situation of families with children and stimulate the birth rate. And parents receive many new opportunities to receive financial support from the state. So this decision is definitely positive for both the welfare of citizens and the demographic situation in the country.”
From January 1, 2024, changes will come into force according to which all officially employed employees of Russian enterprises working remotely will be required to pay personal income tax (NDFL) of the same amount — 13%, regardless of residence and place of performance of official duties. If their income level is above 5 million rubles, the personal income tax rate for them will rise to 15%.
Also, from next month, large-scale changes to the Employment Law will come into force. According to the new edition of the document, mobilized citizens and contract soldiers who have completed their service, as well as members of their families, will receive priority when hiring. Employers hiring young employees will be able to count on financial support from the state. The new version of the law also contains provisions on the indexation of unemployment benefits and a number of other additions.
“Currently, resident remote workers working in the Russian Federation pay personal income tax at a rate of 13% (for incomes below 5 million rubles per year) and 15% (for incomes above 5 million rubles). Non-residents — citizens working remotely in another country — do not pay such a tax. From the beginning of 2024, conditions for those working in Russia and abroad will be equalized. This should lead to an increase in state income under the personal income tax item in the amount of up to 0.5 trillion rubles.»
The conditions for obtaining housing loans are changing in the new year. To get a mortgage in the new year, you will need to make a down payment of not 20%, but 30%. And microfinance organizations, when issuing loans, will have to calculate the debt burden of loan recipients and inform them about the risks if they spend more than half of their income on loan payments.
In addition, starting from the new year, borrowers will have the opportunity to apply for credit holidays not only for mortgage loans, but also for consumer loans.
“On the one hand, banks will benefit from the tightening of requirements for mortgage borrowers, which will come into force on January 1, for which such measures will be able to reduce the risk of late payments and non-repayment of loans. On the other hand, tightening requirements for borrowers will reduce the risks of the banking system as a whole, which means this is a plus for the economy. But borrowers will lose from this innovation. The losers will be primarily young families from those regions where average wages and living standards are generally lower than the Russian average. Tightening the requirements for microfinance organizations, in our opinion, is absolutely correct, since microfinance organizations issue only unsecured loans, and their risks of overdue and even non-repayment of loans are higher. In addition, in a number of regions there are already families in which a total of 70–80% of their income is spent on servicing loans and microloans, and not even just one breadwinner, but the entire family as a whole. Therefore, it is important that the number of bankrupt individuals in the regions does not increase, who, perhaps, in case of delay, will have to pay off their debts with almost the only housing. Registration of credit holidays for consumer loans will be beneficial for everyone — both lenders and borrowers, since the latter will have the legal opportunity to defer payments on debts until a person finds a new job or increases their income to a level that allows them to service the debt in a timely manner. And banks, by providing credit holidays to reliable borrowers, will insure themselves against a possible increase in overdue payments and “bad” debts.”
From January 1, the amount of social tax deductions will increase, including for treatment and education. The maximum amount of expenses from which you can receive a 13% tax deduction for treatment, personal training and the purchase of medicines will increase from 120 to 150 thousand rubles. The tax deduction for children's education will also more than double. From January 1, the deduction amount will be up to 110 thousand rubles. in total for both parents.
Another innovation regarding taxation is coming for recipients of bonuses, prizes and grants. Now they will be exempt from paying personal income tax.
“I don’t think the number of claims will increase much. Those who had a deduction before will simply receive it in a larger amount. Increasing the tax base is a positive step. For residents of regions, the amount of deduction will become more significant. In the case of your own education and the purchase of medicines, it can be up to 19,500 rubles per year and up to 14,300 rubles per year for each child, with a deduction for children’s education.
The tax base for treatment, medicines and personal training was increased by 25%. Roughly speaking, we can assume that deductions for treatment and medicines in 2024 will amount to 159 million rubles, and deductions for one’s own education will be 23.7 million. The tax base for children’s education has increased by 120%, and deductions in 24 may amount to about 52 million rubles.”
In the new year, schoolchildren will begin to be involved in socially useful work. During additional classes, students will clean classrooms, courtyard areas of the school, plant flowers and trees, and help in the library. Previously, in order to involve children in work, it was necessary to obtain parental permission, but from January 1 this will not be required.
In addition, it will be simplified for school graduates to submit documents to universities. Now all data will appear in the service on the State Services portal, where future students will be able to track their own position in the ranking. Moreover, educational institutions will have marks — “recommended for enrollment” or “low chances”.
“According to new changes in the law on education, extracurricular work activities (cleaning classrooms, school grounds, work at additional school facilities) become mandatory for all children. This is part of the educational program and work training, which parents can refuse only for good reasons (due to the health of the child). But in this case, the student will be given another task that he is quite capable of: for example, wiping dust on the shelves in the library or something else. Such activities will help schoolchildren begin to respect social work and begin to value their own efforts to maintain order in the classroom and in the school as a whole. This is not a punishment for children or an extra burden, but a pedagogical method of instilling collective responsibility and habits of daily responsibilities.”
Conscription age and deferment from the army. On January 1, the law changing the conscription age will come into force. Russians aged 18 to 30 will be subject to conscription for military service. Thus, the upper draft age limit will rise by three years: from 27 to 30 years. IT specialists will be able to receive a deferment from the army until the same age. And the lower limit remains unchanged — 18 years.
Changes for motorists. If a citizen needs to obtain a license or replace it, the traffic police will require a medical certificate of fitness to drive. Starting January 1, motorists will also be required to turn on their headlights at any time of the day. The penalty for violation will be from 1,500 to 3,000 rubles.
Road cameras will begin checking the compulsory motor liability insurance of road users. In case of an expired policy or its absence, a fine of 800 rubles will be received.
Increase in sick leave and maternity benefits. Maternity benefits and sick leave payments will increase by almost 1.5 times in 2024. Thus, the maximum amount of temporary disability benefits will increase from 83 to 122 thousand rubles per month. The maximum amount of maternity benefits will increase from 383 thousand to 565 thousand rubles. The maximum amount of benefits for child care up to 1.5 years for working parents will be 49 thousand rubles per month compared to the current 33.2 thousand rubles.