New income tax exemption bracket for 2026 frees workers and retirees earning up to R$ 5,000 monthly — 13th salary arrives without deductions for the first time for millions of Brazilians
Starting in 2026, workers and retirees earning up to R$ 5,000 per month are exempt from income tax. The exemption bracket has been significantly expanded.
The most noticeable impact will be on the 13th salary. For the first time, millions of Brazilians will receive the amount without any income tax deductions.
Previously, the exemption bracket was smaller. Those earning between R$ 2,824 and R$ 5,000 paid income tax on the 13th salary. Now, they are free from it.
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The vast majority of Brazilian workers earn up to R$ 5,000. The benefit reaches a huge portion of the population.
Retirees and pensioners from the INSS are also included. The 13th salary from the INSS follows the same exemption rule.

How the new income tax table works for 2026
The progressive table of the INSS in 2026 applies rates from 7.5% to 14% on gross salary, according to the brackets.
- Up to R$ 1,621: rate of 7.5%
- R$ 1,621 to R$ 2,982: rate of 9%
- R$ 2,982 to R$ 4,473: rate of 12%
- R$ 4,473 to R$ 8,537: rate of 14%
- Maximum INSS deduction: R$ 908.86/month
After the INSS deduction, the income tax table applies. With the new exemption, those with taxable income up to R$ 5,000 do not pay income tax.
In practice, the 13th salary for those earning up to R$ 5,000 will only have the INSS deduction. Zero income tax.
Who benefits
CLT workers with a salary of up to R$ 5,000 gross. This is the bracket that concentrates the majority of formal jobs in Brazil.
Retirees and pensioners from the INSS receiving up to R$ 5,000. The 13th salary is also exempt.
Self-employed and MEIs with taxable income within the bracket. The annual declaration may result in a full refund.
For those earning above R$ 5,000, the exemption does not apply fully. Income tax applies to the excess portion.

Impact on the economy of the pocket
The 13th salary is one of the biggest drivers of consumption at the end of the year in Brazil. Extra money in the pocket boosts commerce.
With the exemption, purchasing power increases. Families will have more resources for debts, gifts, and investments.
For those earning R$ 5,000, the income tax discount on the 13th could reach hundreds of reais. Now, this amount stays with the worker.
Check out more articles on economy and personal finance at CPG.

Welcome exemption, but pay attention to the details
The exemption applies to taxable income, after deductions. Those with other incomes may exceed the limit.
The annual income tax return (IRPF) remains mandatory for those who meet the criteria. Exemption does not exempt from filing.
It is still necessary to monitor regulations. Implementation details may vary according to the rules of the Federal Revenue Service.
Information based on the Federal Revenue Service and reports from Serasa Experian. Consult an accountant for individual analysis.

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