The federal government will announce on Tuesday (18) the bill aimed at expanding the exemption of income tax for workers who earn up to $ 5,000 per month. The project, which will be signed by President Luiz Inacio Lula da Silva at a ceremony at the Planalto Palace at 11:30 am, will still need to be approved by the National Congress before it comes into force.
The measure is part of a Lula campaign promise and can benefit about 30 million Brazilians, according to calculations by the National Association of Federal Revenue Tax Auditors (UNAFISCO). The Government’s goal is to reduce the tax burden for lower income workers and increase the purchasing power of the population.
How will the new exemption work
Currently, the IR exemption range is $ 2,824 monthly. With the expansion to $ 5,000, workers who earn until this amount will no longer have the tax discounted directly on the payroll.
In addition, there will be a “exit ramp” to avoid distortions between taxpayers. Those who earn between $ 5,000 and $ 7,500 will have a partial discount on the tax due, gradually reducing the tax burden. Taxpayers with income above this level will continue to be subject to a maximum rate of 27.5%.
When does it start to be worth?
The project will be sent to the National Congress, where it may change. The expectation of the government is that the new exemption range will only enter into force in 2026. That is, the rules governing follow unchanged.
Who will pay the bill
To compensate for the loss of collection, the government will adopt measures, according to information from the Reuters.
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Duas priNcipal sources of collection are planned:
- Taxation of profits and dividends sent abroad: A 10% rate on profits and dividends sent by companies to their foreign matrices or shareholders are expected. Currently, these values are exempt.
- High Income Tax: The expectation is that those who receive over R $ 50 thousand per month (R $ 600 thousand per year) will have a new tax model. Source retention should be 10% of profits and dividends distributed above this amount, acting as an anticipation of the tax due.
From 2027, the model would function as a minimum tax on yields annually than R $ 600 thousand, covering all sources of income, including exempt stock gains and income.
There would also be a tax reduction for taxpayers who receive profits from companies, considering the volume of taxes already collected by the company.
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According to Reutersthe exact cost of the measure will be R $ 25.84 billion in 2026, R $ 27.72 billion in 2027 and R $ 29.68 billion in 2028.
