Exemption will be valid from 2026, election year; will benefit more than 15 million people and will be one of the PT’s main flags for Lula’s re-election
Seven out of 10 beneficiaries of the president’s (PT) government project that exempts income tax for those earning up to R$5,000 per month are in cities that won (PL) in the 2nd round of 2022.
The data are from cross-referencing carried out by Poder360 with projections of the company’s beneficiaries, which used information from the (Annual List of Social Information) and the (General Register of Employed and Unemployed).
The consultancy estimates that the exemption will benefit 17.8 million people. It is the only projection available with such complete detail by city. Read (PDF – 278 kB). The government speaks of 11 million with zero IR in total and 5 million to 6 million with discounts, but does not detail how this calculation was made. Uses information from 2023.
Income Tax exemption in the Chamber by , with the support of all representatives present, on October 1st. The text now awaits analysis by the Senate, where it faces no resistance and should pass easily. The rapporteur at Casa Alta (MDB-AL), an ally of Planalto.
In the image, the IR voting score in the Chamber: 493 votes in favor and none against
The IR change takes effect in 2026. It is one of the PT’s main bets to boost Lula’s re-election project.
How the Poder360the exemption will mainly benefit the Southeast and South regions – more critical of the current PT administration. The maps above graphically show what this impact will be like.
The Federal Revenue estimates that it will lose R$31.3 billion with the adjustment of the table in 2026. This money will be what will no longer be charged to workers who earn up to R$5,000 or those who will have discounts (those who earn from R$5,001 to R$7,350). For many, savings that will represent almost a 14th salary at the end of the year.
The total number of Income Tax payers will rise from around 44 million in 2025 to close to 34 million in 2026, according to government estimates. Other projections indicate an even greater decline on this basis.
The updated number of declarants will return to the 2020 level, during the pandemic. People benefiting from the new proposal will stop paying tax from January 1st of next year, but will only be required to send their declarations in 2027.
The exemption is just one of several gifts from Congress to Lula that could be used as an electoral showcase for the PT member next year.
Social benefits, which benefit the Northeast and North most, will be the counterweight to the IR exemption. Around 19 million payments are made every month on . An additional 4 million students receive the . For 2026, there will still be , a new social program that will give 1 gas cylinder every 2 months to poor families.
These initiatives will inject billions of reais into the economy next year, avoiding a slowdown expected due to high interest rates.
CAMPAIGN PROMISE
One of Lula’s main promises, the IR exemption, was mentioned by the PT member at least 20 times during the campaign, after he was elected and already in office:
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