President Luiz Inácio Lula da Silva is expected to sanction Bill No. 1,087/2025 next week, approved in both houses of the National Congress.
The expectation is that the sanction will take place from the 11th (Tuesday), after Lula returns from Belém, where he is participating in the Climate Summit.
The matter – proposed by the federal government about a year ago – exempts those earning up to R$5,000 a month from income tax and reduces tax rates for salaries between R$5,000.01 and R$7,350. The project also increases taxation on high incomes, starting at R$600,000 annually (or R$50,000 monthly) – these resources will compensate for losses with exemptions.
Consumption may increase
The measures will only come into force next year. For analysts from different sectors interviewed by Agência Brasil, when the future law will have redistributive potential, it will increase family consumption, could reduce debt and will have a positive impact on economic growth.
Economist João Leme, from Consultoria Tendências, estimates that the Gross Domestic Product (GDP) will gain a boost of 0.15 to 0.2 percentage points. In workers’ pockets, the impact will be “of a 14th salary, but distributed every month of the year.”
In the accounts of Pedro Humberto de Carvalho, from the Institute of Applied Economic Research (Ipea), the lower strata of the middle class they should have an additional R$350 to R$550 per month, on average.
“It will be a considerable budgetary gap”, he says.
Inflation and inequality
Optimistic, Carvalho does not rule out, however, the possibility of localized inflation. “Every time there is greater income available to the population, consumption of services must increase”, such as commerce, education, health, information technology and tourism.
“Services is a sector very sensitive to inflation”, he observes, ruling out a vigorous increase in the price of food.
In the opinion of the deputy technical director of the Inter-Union Department of Statistics and Socioeconomic Studies (Dieese), Victor Pagani, inflation will not be a problem, as “it is under control” and in the process of “slowing down.”
In his opinion, another more likely effect is quite desirable: reducing economic inequality by exempting the lowest income earners from taxes and starting to charge taxes to the richest. “This measure rescues the constitutional principle of taxation according to contributory capacity”, he argues.
Lawyer Bruno Medeiros Durão, a tax specialist and finance specialist, believes that correcting the Income Tax table is “an important step towards fiscal justice”, but it is not enough.
“The problem with our Income Tax is not fiscal, it is social justice. Therefore, the measures have to be structural”, he says. For him, the main structural measure is “to return to taxing profits and dividends.” In his assessment, “it is unthinkable for a country to maintain exemption on the capital income of the richest, while the worker pays Income Tax (IR) on their salary. The IR has to be levied on all income”, he ponders.
The lawyer assesses that the Income Tax table is outdated and has few rates. “The ideal is to correct the table annually, link this correction to inflation, increase the number of bands and, crucially, create a higher maximum rate for very high income earners, who today avoid paying what they should”, he criticizes.
Measures to be announced could increase consumption – photo – Tânia Rêgo/Agência Brasil
Debts
Another effect highlighted by those interviewed by Agência Brasil is the payment of debts incurred by families. “The fulfillment of debts contracted in the past will certainly be one of the possible destinations and most likely one of the most common”, predicts João Leme.
According to the Consumer Debt and Default Survey (Peic), eight out of every ten families had some debt due in October. A study by the National Confederation of Commerce in Goods, Services and Tourism (CNC) points out that October was the ninth consecutive month that the percentage of debtors increased and remained the highest level recorded in the historical series.
Respondents also consider that exemption from income tax among lower-income workers and increased taxation on the richest part of society will be issues debated during the 2026 election campaign.
“Candidates who know how to translate the taxation of ‘super rich’, dividends and large fortunes into concrete relief for the lives of the middle class will have a very powerful narrative. The agenda has a strong ideological alignment, forcing all presidential candidates to take a clear position on the taxation of income and assets. I believe it will be one of the hottest and most decisive topics”, summarizes lawyer Bruno Medeiros Durão.
