On November 26, 2025, Law No. 15,270/2025 was enacted, introducing significant changes to the Individual Income Tax (IRPF) regime, most notably ending the general exemption on the distribution of profits and dividends that had been in force in Brazil since 1996.
The new statute establishes a 10% withholding income tax on distributions exceeding a certain monthly threshold, in addition to creating transitional rules and the so-called Minimum Individual Income Tax (IRPFM).
Taxation of Profits and Dividends as of January 1, 2026
As of January 1, 2026, profits and dividends distributed by legal entities to individuals resident in Brazil will be subject to:
- 10% withholding income tax (IRRF),
- whenever the total amount distributed by the same paying source to the same beneficiary exceeds R$ 50,000.00 in a given month.
The tax applies to the entire amount distributed in the month once the threshold is exceeded. No deductions from the tax base are allowed.
The rule applies to companies under all tax regimes, including Actual Profit (Lucro Real), Presumed Profit (Lucro Presumido), and Simples Nacional, the latter without any differentiated treatment for dividend taxation purposes.
It should be noted that taxation occurs exclusively at the level of the individual beneficiary, through withholding at source.
Transitional Regime (2025–2028)
The law establishes a transitional period intended to preserve profits accrued prior to the legislative change:
- Profits calculated up to the 2025 calendar year remain exempt,
- provided that the corporate resolution approving distribution is formally adopted by December 31, 2025.
Even if payment is made up to 2028, such amounts remain fully exempt.
This rule underscores the importance of proper accounting and corporate formalization during 2025.
Minimum Individual Income Tax (IRPFM)
In addition to taxing dividends, Law No. 15,270/2025 created a minimum income tax applicable to higher-income individuals, the IRPFM.
This tax applies to individuals whose aggregate annual income—including salaries, pro labore compensation, dividends, capital gains, and rental income—exceeds R$ 600,000.00.
It is important to note that dividend income taxed at source will be included in the calculation of the annual minimum income tax.
The minimum effective tax rate is progressive, reaching up to 10% for annual income exceeding R$ 1.2 million.
Final Considerations
Accordingly, early preparation during 2025 and the restructuring of shareholder remuneration strategies will be essential to mitigate the tax burden and ensure legal certainty in subsequent tax years.
It should also be noted that controversial aspects of the new measure remain, and may still be subject to amendments or regulatory adjustments in the coming months.