The Federal Senate approved, on November 5, 2025, Bill No. 1,087/2025, which expands the individual income tax (IRPF) exemption threshold to taxpayers earning up to R$ 5,000 per month and introduces a new tax burden on higher-income brackets.
The text, already approved by the Chamber of Deputies, now proceeds to presidential sanction and is expected to enter into force in January 2026.
Key Provisions of the Bill
- Full exemption for taxpayers earning up to R$ 5,000 per month.
- Reduced intermediate rates for monthly income between R$ 5,000 and R$ 7,350.
- Creation of an additional tax rate of up to 10% for annual income above R$ 600,000 (approximately R$ 50,000 per month).
- Maintenance of tax exemptions for LCIs, LCAs, real estate funds, and agribusiness funds, thereby preserving incentives for strategic sectors.
According to the bill’s rapporteur, the new exemption threshold will benefit approximately 25 million workers, strengthening the purchasing power of middle- and lower-income groups, while the progressive taxation of higher incomes seeks to ensure fiscal balance.
Expected Impacts
The measure will reduce the tax burden for a substantial share of taxpayers, while increasing revenue derived from higher-income brackets.
For companies and self-employed professionals, it will be important to review compensation structures and profit-distribution policies, as income exceeding the new threshold may be subject to the additional rate. Increased scrutiny of aggressive tax-planning strategies involving dividends and capital income is also expected.
At the macroeconomic level, the government anticipates that the expanded exemption will have a positive effect on domestic consumption, with a neutral or slightly positive net impact on overall revenue due to the new tax on high-income earners.