The exemption range would be R$5,136.01 and would cover a total of 28.4 million Brazilians, according to Unafisco
The full correction of the IRPF (Individual Income Tax) table would cause a loss in revenue collection. R$ 235.97 billion per year. The changes would lead to an exemption range of R$5,136.01 and would cover a total of 28.4 million Brazilians.
In practice, another 12 million would benefit. The data are from the (National Association of Tax Auditors of the Federal Revenue of Brazil) and consider the IPCA (Broad National Consumer Price Index). Here is the document (PDF – 474 kB).
“This is a necessary and desired measure to achieve tax justice for the salaried middle class and is essential to promote greater tax justice and preserve the purchasing power of Brazilians”says Mauro Silva, president of Unafisco Nacional.
O Poder360 that the correction of the exemption range for those who receive up to R$5,000 per month would lead the president’s government (PT) to a loss of annual revenue of R$51 billion from 2026.
If this is done, the projected revenue is R$312.26 billion annually and more 9.6 million Brazilians would be considered. In total, 26 million declarants would be free from taxation under these conditions.
LULA’S PROMISE
The expectation is that President Lula will forward a bill on the topic to Congress in 2025. The correction of the Income Tax table was a promise of the PT member’s electoral campaign in 2022.
Lula stated that the income is necessary for the person to start paying the tax. The president’s goal is for it to come into force by 2026. To achieve this, it will be necessary to increase the value by R$2,176 until the end of the government.
Today, anyone earning up to 2 minimum wages (R$2,824) is free from IRPF. There are 16.5 million Brazilians exempt from the current Income Tax table.
On November 27, the Minister (Finance) in a statement on national radio and TV announced the exemption from IRPF for those earning up to R$5,000 per month. However, the changes depend on Congress and would take place in 2026.
The announcement of the new range in conjunction with , which seeks to reduce expenses, caused a negative reaction from the financial market.
HOW THE GOVERNMENT WANTS TO COMPENSATE
For each expense or tax waiver, the government must present a form of compensation. According to Haddad, the new IRPF exemption will be paid for by taxing those who receive more than R$50,000 monthly.
There will be a minimum rate of 10% for this group in the IRPF, which will apply to any type of financial gain such as profit, dividends, rent, bonuses and others.
Currently, the rate is 27.50% for earnings above R$4,664.68 per month, but the government will now consider types of income currently exempt.
The Executive Secretary of Finance, Dario Durigan, also said that the bill that the government will send to Congress on the subject will have changes to the rules for paying dividends outside the country.
“We have been debating the issue of paying dividends abroad so that there is no incentive to change tax domicile, but this will be presented when the bill is presented to Congress”these.
