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Proposal Reported by Arthur Lira May Benefit Up to Ten Million Brazilians, but Clash Over How to Compensate for Annual R$ 30 Billion Loss Threatens Historic Vote, According to O Globo
The Chamber of Deputies decides this Wednesday whether millions of workers will be exempt from Income Tax up to R$ 5,000 monthly. The project, submitted by the government seven months ago, has become an absolute priority and is considered one of the main legislative victories of Lula’s administration in 2025.
Despite the consensus on the exemption threshold, the impasse lies in compensating for the revenue loss, estimated at R$ 30 billion per year. Deputies are pressing for changes and new sources of revenue, while the Planalto bets on the approval of the text to already ensure effects in 2026, an election year.
What the Project Reported by Lira Provides
The report presented by Arthur Lira maintains the full exemption up to R$ 5,000 monthly and expands the transition range up to R$ 7,350, with progressive taxation.
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To balance the tax waiver, it includes a minimum tax of 10% for annual incomes above R$ 1.2 million and a 10% tax on profits and dividends sent abroad above R$ 50,000 monthly.
Additionally, the text provides for automatic compensation to states and municipalities, meeting the demand of governors and mayors, and the possibility of using any surplus to reduce the rate of the new Contribution on Goods and Services (CBS).
The idea is to safeguard the federal pact and avoid regional losses, one of the most sensitive points in the negotiations.
The Impasse of Compensations
The significant obstacle lies in how to finance the waiver.
An amendment led by Cláudio Cajado, with the support of 35 legislators, suggests expanding the partial exemption threshold to R$ 7,590.
Covering the cost with an additional 5% on the CSLL for banks and financial institutions that have profits above R$ 1 billion annually.
The financial sector has already signaled resistance, and leaders of the Centrão estimate that the proposal could stall the vote.
Other alternatives, such as taxing online betting or tech giants, have also been considered but face the government’s concern about opening too many conflict fronts.
Political Pressure and Race Against Time
The Planalto is working to approve the full proposal today and send it to the Senate, where Davi Alcolumbre has already promised speed.
Lula reinforced the appeal during a private lunch with leaders, urging maximum effort to ensure that the exemption takes effect in 2026.
However, behind the scenes, the possibility of splitting the vote is not ruled out: first approving the exemption threshold, which has consensus, and leaving the definition of revenue sources for a later stage.
This solution, however, divides leaders and could weaken the Chamber’s prominence in the process.
Social and Electoral Impact
According to the government, the measure may directly benefit ten million Brazilians, easing the tax burden on the middle class and strengthening families’ purchasing power.
At the same time, the billion-dollar dispute over who pays the bill puts the balance of public accounts and the market’s mood at stake.
Experts remind us that the Income Tax is one of the most symbolic taxes for the population and that any amendment in a pre-election year carries significant political weight.
The approval or rejection of the text could set the economic agenda for 2026.
Today’s vote may determine whether millions of Brazilians will be exempt from the Income Tax up to R$ 5,000, but the billion-dollar bill still generates divergences.
The government advocates relief for workers, while opponents warn of fiscal risks and new burdens on strategic sectors.
In your opinion, should the priority be to ease the burden on those earning less or to protect revenue against the estimated R$ 30 billion shortfall? Leave your comment — we want to hear how you see this change in practice.
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