Annual income over R $ 1 million will have 10% tax range

The president’s government (PT) proposes to establish a minimum tax of 10% for those who have an annual income of R $ 1.2 million per year. According to the economic team, 141,400 people will be required to pay this tax.

The expectation is to raise $ 25.22 billion. This measure will help to compensate for the impact of expanding the exemption from the IRPF (Individual Income Tax) for those who earn up to R $ 5,000 monthly.

Another part (R $ 8.9 billion) will come from 10% of income tax on dividends abroad.

The government estimates that there will be a whole Reduction of R $ 30.84 billion in revenue with measures to increase the exemption range. Here’s (PDF – 4 MB) of the presentation of the main points.

The text of the project will be sent to Congress. If approved, the impact is from 2026.

High -income taxation will be progressively. Here’s how it will work:

• annual income of R $ 600 thousand – final rate of 0% (not paid);
• annual income of R $ 750 thousand – final rate of 2.5% (pays minimum tax of R $ 18,750);
• annual income of R $ 900 thousand – final rate of 5% (pays a minimum tax of R $ 45,000);
• annual income of R $ 1.05 million – final rate of 7.5% (pays minimum tax of R $ 78,750);
• annual income of R $ 1.2 million – final rate of 10% (pays minimum tax of R $ 120 thousand).

“There will be a minimum tribute whose ceiling is 10%. […] The sense of justice guided us in this proposal ”said the executive secretary of the farm, Dario Durigan, in an interview with journalists.

The IRS will calculate all income received in the year and will consider salaries, rents and dividends. If the sum is less than R $ 600 thousand, there will be no additional charge.

According to the government, when calculated the tax due, some income will be excluded:

• savings;
• Exempt titles;
• heritage;
• retirement;
• pension of severe disease;
• sale of goods;
• other exempt securities; and
• compensation.