Proposal removes benefit from the Framework spending limit; text now goes to sanction
This Wednesday (25th March 2026), the Chamber of Deputies approved PLP (Complementary Bill) 77 of 2026, which relaxes fiscal rules to allow for the expansion of paternity leave and paternity pay in 2026. There were 391 votes in favor, 33 against and two abstentions.
The text, reported by the deputy (PSB-PE), creates an exception in budget laws to ensure that the benefit is not blocked by spending control triggers.
In practice, the project resolves a legal and financial impasse. According to the general rule of the LDO (Budget Guidelines Law) of 2026, the creation of new mandatory expenses was prohibited and the growth of social security expenses above 2.5% per year was prohibited. The PLP approved today removes paternity leave from this restriction.
Furthermore, spending on the benefit is no longer counted within the growth limit of primary expenses in the Fiscal Framework. This means that the government has room to implement the right without having to cut funds from other areas to compensate for the spending cap.
Tax “break”, however, is not a blank check. For the benefit to be paid, it is mandatory to indicate where the money will come from (source of total funding). The rapporteur said that the measure is neutral for public accounts, as it requires compensation or prior forecasting of revenue.
PATERNITY LEAVE
In March, Congress approved a project that gradually extends paternity leave from 5 to 20 days:
- 10 days from January 1, 2027;
- 15 days from January 1, 2028;
- 20 days from 2029 onwards.
The benefit will be paid by Social Security – that is, with the money of tax payers.
The net fiscal impact (which includes expenses and lost revenue) of the project is estimated at:
- R$2.2 billion in 2027;
- R$3.3 billion in 2028;
- R$4.3 billion from 2029.
One of the compensation measures evaluated is to reduce tax benefits and allocate resources to Social Security.
The proposal, however, establishes that the extension to 20 days will only come into force if the goals defined in the LDO (Budget Guidelines Law) for the 2nd year of the rule’s validity are achieved.
If the fiscal objective is not achieved, the new deadline will be postponed and will only come into effect 2 years after the target is met.
