The Senate plenary unanimously approved, this Wednesday (5), Bill 1,087/2025which expands the Income Tax (IR) exemption range, covering those earning up to R$5,000. Forwarded by the federal government in March to Congress, the text was approved in October by the Chamber and, after a vote by the Senate, it could be sanctioned. 
The sanction should occur in the next few days so that the exemption can be valid in 2026. The main change is that the project exempts those earning up to R$5,000 a month and increases taxation on the richest.
The government estimates that around 25 million Brazilians will pay less taxes, while another 200,000 taxpayers will see some increase in taxation.
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Check out the main changes following the approval of the project below:
Who will stop paying Income Tax?
Currently, the IR exemption only applies to those earning up to R$3,076 (two minimum wages). The new legislation will exempt, from January next year, income tax on monthly income of up to R$5,000 for individuals.
Which income brackets will pay less tax?
For those earning between R$5,000.01 and R$7,350, there will be a partial reduction in the amounts to be paid – the less you earn, the greater the reduction.
Taxpayers with income above R$7,350 will not be covered by the measure.
Who will pay more tax?
To compensate for the loss of revenue due to the exemption, the project provides for an extra progressive rate of up to 10% for those who receive more than R$600,000 per year, the equivalent of R$50,000 per month. The text also establishes taxation for profits and dividends remitted abroad at a rate of 10%.
High-income individual taxpayers today collect, on average, an effective income tax rate of 2.5% on their total income, including distribution of profits and dividends. Workers in general pay, on average, 9% to 11% in income tax on their earnings.
When will the change be valid?
The new rule will be valid from next year, if it is sanctioned by November 11th. The government has already signaled that it will sanction the measure by this date.
That way, From January 2026, those who earn up to R$5,000 will no longer have to pay tax deducted and those who earn up to R$7,350 will pay less.
In practice, the exemption will have an impact on the 2027 IRPF declaration, with the base year 2026.
