President Luiz Inácio Lula da Silva celebrated this Wednesday night (5) the Senate approval, unanimously, of bill 1087/2025 which exempts those earning up to R$5,000 per month from Income Tax (IR) and increases taxation on high incomes.
Being sanctioned until the 11th by President Luiz Inácio Lula da Silva, as predicted by the Minister of the Secretariat of Institutional RelationsGleisi Hoffmann, the IR reduction comes into effect from January 2026.
The government estimates that around 25 million Brazilians will pay less taxeswhile another 200 thousand taxpayers will have some increase in taxation.
“Today is a historic day. We took a decisive step towards a fairer country, with a tax system that makes contributions more balanced and recognizes the efforts of everyone who helps build Brazil”, highlighted President Lula, speaking on social media.
“Whoever earns a lot will contribute their fair share. The name of this is tax justice.”
Lula thanked President Davi Alcolumbre, rapporteur Renan Calheiros (MDB-AL) and the leaders who led the process of approving the project in the Senate, after its approval in the Chamber. Unanimously, in both cases.
“A victory for democracy and social justice. It is the Government of Brazil on the side of the Brazilian people”, highlighted Lula.
The PL 1087/2025 it was sent by the government in March to Congress and approved in October by the Chamber. The proposal’s rapporteur only accepted amendments from senators Eduardo Gomes (PL-TO) and Rogério Carvalho (PT-SE).
Understand the project
Being sanctioned by President Lula in 2025, the new legislation will exempt, from January of next year, income tax on monthly income of up to R$5,000 for individuals and will partially reduce the tax paid by those earning between R$5,000.01 and R$7,350.
There will be a minimum income tax rate for those earning from R$600,000 per year. The text foresees a progression, reaching 10% for income above R$1.2 million per year, including dividends.
Another point is that, from January 2026, the delivery of profits and dividends from a legal entity to the same individual resident in Brazil in a total amount greater than R$50 thousand per month will be subject to IRPF of 10% on the payment, with any deductions in the calculation base prohibited.
According to the project, payments of profits and dividends whose distribution has been approved by December 31, 2025 are excluded from the rule, even if the payment occurs in the following years.
