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Income Tax Exemption Can Benefit Salaries Up to R$ 5 Thousand in 2026; See How Much Each Salary Range Will Save on Tax.
The Chamber of Deputies made progress this week on the discussion regarding the expansion of the Income Tax (IR) exemption. The bill, already approved in a special committee and on an urgent basis in the National Congress, may be voted directly in the plenary and provides that, starting in 2026, workers with salaries of up to R$ 5 thousand will be exempt.
The change is expected to impact around 10 million people, but experts assess that the project is still limited and not very progressive.
According to calculations from Confirp Accounting, those earning R$ 5 thousand per month will be the main beneficiaries, with savings of approximately R$ 313 per month, which represents R$ 4,067 per year, including the thirteenth salary.
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Gains will gradually decrease up to the range of R$ 7,350, above which there will be no change.
How Much Each Salary Range Will Save on Tax
According to estimates, savings vary according to income:
R$ 3,400 → R$ 27.30 per month (R$ 354.89 per year);
R$ 4,000 → R$ 114.76 per month (R$ 1,491.89 per year);
R$ 5,000 → R$ 312.89 per month (R$ 4,067.57 per year);
R$ 5,500 → R$ 246.32 per month (R$ 3,202.19 per year);
R$ 6,000 → R$ 179.75 per month (R$ 2,336.75 per year);
R$ 6,500 → R$ 113.18 per month (R$ 1,471.31 per year);
R$ 7,000 → R$ 46.60 per month (R$ 605.86 per year);
R$ 7,350 → no additional savings.
For the tax director at Confirp, Welinton Mota, “it’s almost an additional salary per year” for those earning R$ 5 thousand, but due to the progressivity of the IR, benefits decrease until they zero out at the range of R$ 7,350.
Chamber of Deputies Accelerates Voting
The decision of the Chamber of Deputies to expedite the proposal shows the government and legislature’s intention to approve the measure by 2025, ensuring effects in 2026.
According to the rapporteur, Arthur Lira (PP-AL), the change is expected to directly benefit 500 thousand Brazilians and aims to preserve the “neutrality” of the system.
If approved, it is estimated that 65% of tax filers will be exempt starting in 2026, equivalent to 26 million people. This means that 87% of the Brazilian population would no longer pay the tax.
Criticism and Debate on Tax Justice
Despite the positive impact for part of the middle class, the proposal has sparked debates among economists and social organizations. According to the Minister of Finance, Fernando Haddad, the measure aims to correct distortions:
“I often say that, in Brazil, the resident of the penthouse does not pay the condominium and the caretaker does. This is the reality of our tax system.”
However, experts warn that increasing the income tax exemption threshold does not benefit the poorest, but rather middle and upper-middle-class workers.
Pnad data show that only 32% of Brazilians fall into the brackets that will benefit from the IR reduction.
According to researcher Bráulio Borges from FGV Ibre, “in practice, 80% of taxpayers will not pay IR in Brazil, and those earning over R$ 6 thousand are already among the top 10% richest in the country.”
Compensation: Taxation of the Wealthy and Dividends
To compensate for the loss of revenue, the government proposes taxing so-called super-rich individuals, those earning above R$ 50 thousand per month. Additionally, dividends would also be taxed, albeit in a limited manner.
Experts, however, consider the measure timid. Ipea economist, Sérgio Gobetti, advocates for a more robust taxation on profits and dividends, as seen in developed countries.
He estimates that revenue could exceed R$ 100 billion per year with stricter measures.
Organizations Call for Bolder Progress
Organizations such as Inesc and Oxfam Brazil acknowledge the progress of the proposal but caution that it should not be seen as a final point:
“The proposal under consideration should be viewed as a starting point, a foundation upon which a fairer system can be built, and not as a ceiling that limits the debate.”
According to these organizations, it is necessary to move toward a more progressive and inclusive taxation system, reducing the burden of consumption taxes—which disproportionately affect the poorest.
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