The House of Representatives approved on Wednesday (1st), with 493 votes favorable and no contrary, the base text of the bill (PL) 1,087/2025, which provides exemption from income tax (IR) for individuals with monthly income of up to R $ 5,000 and discount for those who earn up to $ 7,350 per month. 
The proposal, sent by the federal government, still will have to be approved in the Senate, before the sanction by President Luiz Inacio Lula da Silva to come into force.
IR reduction was a Lula campaign promise in 2022. Submitted to the House in March, the text was approved in a special committee that analyzed the text.
Currently, they are exempt from tax who earns up to R $ 3,036. The project determines that, In 2026, people who earn up to $ 5,000 will have a monthly discount of up to $ 312.89, so that the tax due is zero. Already who earns from R $ 5,000.01 to R $ 7,350.00, the discount will be R $ 978.62.
According to the government, with the approval of the proposal, more than 26.6 million taxpayers will benefit from the exemptionin 2026.
After unanimous approval, Mayor Hugo Motta (Republicans-PB) stressed that approval is a historic day for the country and parliament.
“Here we demonstrate that when the theme is the well-being of Brazilian families, there are no sides, no divisions. It is the country’s interest above any difference,” he said. “The House of Representatives knows how to hear, decide and be with Brazil,” he added.
Compensation
To compensate for the exemption, whose cost is estimated will be R $ 25.8 billion to the public coffers, the project foresees the taxation of people with income over R $ 600 thousand per year, with a progressive rate of up to 10%.
The maximum rate will focus on those who receive annually from R $ 1.2 million. In addition, it will not be applied to those who already pay the maximum IR rate, which is 27.5%.
According to the Ministry of Finance, the measure will reach about 140 thousand people, 0.13% of taxpayers, who today pay, on average, only 2.54% of income tax.
The rapporteur of the bill, Deputy Arthur Lira (PP-AL), estimates that there will be a leftover of R $ 12.7 billion by 2027 with the taxation. In his opinion, Lira allocated these resources to compensate for the reduction of the tax rate on goods and services (CBS), instituted by the tax reform.
“It is important to emphasize that this project will directly meet 15.5 million people in the country. This project is the result of a calculation base of almost R $ 227 billion, which is calculated in income tax in Brazil. And we are discussing a revenue resignation, in the first year of R $ 25.4 billion, so 10% of the total amount of income tax paid by all Brazilians,” he said.
Tax justice
Deputy Carlos Zarattini (PT-SP) said that with the project, the country begins to do tax justice.
“Our country is a country of inequality, it is a country where a tiny minority holds most of the wealth while most of the Brazilian people live in difficult conditions. Tax justice needs to be done and this project that aims at tax justice. A justice that can reduce inequalities, which can make people of lower income and the Brazilian middle class better, a better ability to live their lives,” he said.
Deputy Fernanda Melchiona (PSOL-RS) recalled that the initiative was based on the September demonstrations against the Proposed Constitution Proposal (PEC) of the prerogatives, the so-called Armage PEC and the amnesty project to prisoners by the scammers of January 8, 2023.
“This project is very important, millions of Brazilians will be impacted by the immediate reduction of income tax and the reduction for those who earn between $ 5,000 and $ 7,000 and, at the same time, a minimum tax that will be charged from super rich,” he added.
Criticism
The initiative was the object of criticism from some parliamentarians. Deputy Gilson Marques (Novo-SC) said the resources will not go to the poorest and criticized the taxation of profits and dividends.
“Let’s charge from the richest, there are only 140,000 people to give to the poorest. This is a lie! This money doesn’t go to the poorest, it goes to politicians. And it is better that this money is still with the richest, because they employ, buy the machines, do the products,” he argued.
The text determines that the use or delivery of profits and dividends by the same legal entity to the same individual resident in Brazil in an amount of over R $ 50 thousand monthly will be subject to retention at the source of the IRPF to the 10% rate of the total paid, credited, employee or delivered.
The incidence of income tax at the source, profits and dividends relating to results calculated by the calendar year of 2025, and whose distribution has been approved by December 31, 2025, will not be subject to the incidence of income tax at source.
Earlier, Deputy Bibo Nunes (PL-RS) classified the measure as “populist”, although he agrees that it is necessary. “It’s just political play, clientelism, because Lula didn’t present it in the first year [de governo]? ”He asked.
For Deputy Luiz Carlos Hauly (Pota-PR), the proposal is an electoral measure, but without structural repair. “Did this solve the problem of the poor of the poor? No. The poor keep paying the highest tax burden in the world. This is deception. It has nothing to do with the restructuring of the tax burden system over the poor,” he said.
