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Tax Reform Requires Progressive Tax on ITCMD, Redefines Inheritance and Donation Taxation with Ranges Between 2% and 8% According to Transmitted Value, Standardizes Requirements for All States, and Promises Greater Fiscal Justice in Wealth Succession
The Tax Reform requires progressive tax on inheritances and donations across the country. With Constitutional Amendment No. 132 of 2023, the ITCMD will now be tiered, meaning that the larger the inheritance, the higher the applicable rate, within the constitutional ceiling of 8% defined for the states.
For families and planners, this change ends years of controversy over the possibility of progressivity in the tax and forces a review of strategies for transferring wealth in life and by succession. States that used a single rate will need to adopt progressive tiers, aligning taxation with the principle of contributory capacity and the pursuit of greater balance in revenue collection.
What Changes with EC 132 of 2023
Constitutional Amendment No. 132 made the progressivity of ITCMD mandatory for all states.
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Previously, adopting tiers was a local choice and was not always immune to legal challenges.
Now, the Tax Reform requires progressive tax with tiering based on transmitted value, maintaining the ceiling of 8% and allowing each Legislative Assembly to define the intermediate ranges.
In practice, the standardization of the requirement reduces regional asymmetries and provides predictability for taxpayers.
The states remain responsible for detailing the tiers and calculation bases, but the overall structure is no longer optional.
This standardization facilitates wealth planning and the comparison of scenarios across federative units.
Why Progressivity Was Adopted
The progressivity of ITCMD meets the stated goal of fiscal justice, increasing the relative contribution of large transfers while preserving lower rates in the initial tiers.
The measure also seeks to strengthen state revenue without expanding the tax base, redirecting the effort to larger estates.
In addition to the distributive effect, the change puts an end to recurring debates about the constitutionality of tiering.
With the Tax Reform requiring progressive tax as an express rule, states gain legal certainty to legislate and enforce, and taxpayers begin to operate under more stable parameters.
How Inheritances, Donations, and Assets Abroad Are Affected
The ITCMD applies to transmissions causa mortis and donations.
With mandatory progressivity, living donations may also reach higher tiers when the values exceed the initial limits.
Each state will define the tiers and criteria, including any specific exemptions.
The reform also made adjustments for cases involving foreign assets, clarifying the jurisdictions when the donor, the deceased, or the assets are outside Brazil.
The goal is to reduce disputes and avoid gaps in taxation of these transactions, preserving the national ceiling and the progressive logic.
Impacts on Succession Planning
With the new rule, families are likely to reassess strategies such as donations with usufruct reservation, transfer schedules, corporate organization, and asset diversification.
In large estates, spreading donations over time may help stay in lower tiers, as long as state rules and exemption limits are observed.
Although structures like family holdings and financial instruments remain relevant, the Tax Reform requires progressive tax and shifts the focus to managing tiers and calculation bases.
Effective planning involves inventorying assets, proper valuation, and monitoring the laws of each state.
What Remains the Same and What May Change in the States
The 8% ceiling of ITCMD remains a national limitation, while the definition of the tiers, evaluations, and operational procedures continues locally.
States that already practiced progressivity must adjust their frameworks to adhere to the new constitutional standard, and states with a single rate will have to approve tiers.
The tax base remains the market or appraised value of the transferred assets and rights.
It is essential to pay attention to declaration deadlines, documentation requirements, and payment methods to avoid fines and interest.
Compliance with deadlines and accurate documentation reduces unnecessary costs, especially in estates with many assets.
Expected Effects for Families and the Market
Predictability favors more transparent succession agreements and reduces litigation over who pays how much and when.
For the market, the trend is for greater formalization of evaluations and registrations, in addition to demand for specialized legal and financial services.
The Tax Reform requires progressive tax and is expected to induce more robust wealth governance practices.
In the short term, the transition requires operational attention, but in the medium term, the progressive structure tends to stabilize behaviors.
Families with significant wealth may anticipate reorganizations to optimize tiers, while smaller transmissions should remain at lower rate levels.
The Tax Reform requires progressive tax on ITCMD and inaugurates a phase of greater clarity and standardization in the taxation of inheritances and donations.
The tiering between 2% and 8% realigns the system with contributory capacity and pressures for more careful planning of successions and living donations.
In your opinion, does the progressivity of ITCMD correct distortions and promote fiscal justice, or does it tend to excessively increase the succession planning costs for Brazilian families? Let us know in the comments how you plan to organize yourself in light of the new tiers and which aspects of the transition concern you the most.
O que a população geralmente não sabe é que imposto progressivo significa quanto mais rico, mais imposto, ou seja, 99,3% da população mal vai ter esse imposto, o povo é quebrado, n tem um real e acha que vai ter que pagar mais imposto pq tem “impostos progressivos” Acordem aí, pobres Premium! nenhum de vocês é rico, ou sequer vai pagar imposto. A isenção no IR vai enriquecer muita gente, e mesmo assim não vai ser suficiente pra fazer as pessoas pagarem o imposto sobre herança de tão pobre que nossa população é. Não pensa q vc aí que ganha 5 mil por mês vai ter herança pra deixar pra filho, aliás, nem filho a população brasileira tá tendo direito, se tivessem tendo pelo menos isso a população do país não tinha aumentado tão pouco.