With the expansion, the number of Brazilians exempt from IR will rise to around 65% of declarants, an estimated increase of 10 million taxpayers
This Wednesday (5), unanimously approved the bill that expands the exemption range for salaries of up to R$5,000. The text now goes to presidential sanction. Sent by the government in March, the project increases tax exemption for those earning up to R$5,000 and establishes tiered discounts for incomes between R$5,000 and R$7,350. Those who receive above this amount will continue to be subject to the current rules, with progressive taxation of up to 27.5%
With the expansion, the number of Brazilians exempt from IR will rise to around 65% of declarants, an estimated increase of 10 million taxpayers. The text was approved with the same points included by the Chamber of Deputies, including those that had been criticized by the rapporteur in the Senate, Renan Calheiros (MDB-AL), who chose to maintain the structure to speed up presidential sanction. Understand below what is foreseen in the project.
Partial discount up to R$7,350
The tiered discount applies to those earning between R$5,000 and R$7,350, with a partial tax reduction. The discount range, which in the government’s original text was limited to incomes of up to R$7,000, was expanded by the Chamber, under the report of deputy Arthur Lira (PP-AL).
Taxation of the richest
To compensate for the tax waiver with the expansion of income tax exemption, the project creates a “minimum income tax” for high-income taxpayers, especially those who have a significant portion of exempt income, such as profits and dividends.
According to the Federal Revenue, around 141 thousand taxpayers fall into this category. The charge will be applied to anyone earning more than R$50,000 per month (R$600,000 per year). The rate is gradual and reaches 10% for those who earn R$100,000 or more per month (R$1.2 million per year).
The calculation will be based on the effective rate, that is, how much the taxpayer actually pays in tax on all his income, whether taxable or not. Anyone who already pays above the minimum rate will not need to supplement; Whoever pays less must settle the difference with the tax authorities.
Taxation on dividends
The text also creates a fixed rate of 10% on dividends, currently exempt, when the amount received exceeds R$50,000 per month per company. The charge will be made at source and will begin to take effect in 2026, as a way of compensating for the loss of revenue with the new exemption range.
Taxation will not apply to companies that already collect IR at the full nominal rate – such as financial companies, insurance companies and educational institutions that offer Prouni scholarships, which may deduct the value of the scholarships from the tax calculation.
Exceptions for calculating high income
Some income will be excluded from the minimum tax calculation, such as inheritances, savings, compensation for accidents or serious illnesses, disability pensions, dividends paid by foreign governments and income from exempt securities (such as LCI, LCA, CRI, CRA, real estate funds and encouraged debentures).
These exceptions may result in taxpayers who would qualify as high income falling below the cutoff line and not being required to pay the additional tax.
Impact on states and municipalities
The expansion of the exemption will represent a drop in revenue for States and municipalities, since IR forms the basis for transfers from the State Participation Fund (FPE) and the Municipal Participation Fund (FPM).
To compensate for losses, the text provides for an increase in transfers to these funds and, in the event of a surplus in revenue, additional quarterly transfers to federative entities.
Side project about bets and fintechs
At the same time, the Senate is also analyzing a project that increases taxation on sports betting (“bets”) and fintechs, authored by Renan Calheiros and reported by Eduardo Braga (MDB-AM)
The proposal increases the rate on GGR (gross betting revenue) from 12% to 24% and increases the CSLL for payment method fintechs from 9% to 15%. The measure is seen as an alternative to compensate revenue for the government in the face of changes in IR.
*With information from Estadão Conteúdo
