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The New Exemption Threshold for Income Tax for Those Who Earn Up to R$ 5,000 Monthly May Indirectly Affect the MEI, but the Changes Will Take Effect Only in 2026; Meanwhile, Those Who Keep Formal Accounting Can Continue to Distribute Up to R$ 600 Thousand Per Year Without Paying Income Tax on Profit
The approved income tax reform in the Chamber promises to raise the exemption threshold to R$ 5,000 per month, but its direct effects on the MEI will only be felt in 2026. Until then, the individual micro-entrepreneur remains subject to the same rules, with taxable income only on the pro-labore and part of the distributed profits when there is no formal accounting.
In practice, the change does not alter the MEI’s revenue ceiling of R$ 81 thousand per year, but redefines the criteria for who needs to declare income tax and how the income is taxed. For those who maintain accounting, the profits distributed up to R$ 600 thousand per year remain completely exempt, reinforcing the importance of formal bookkeeping as a tax protection strategy.
How Income Tax Works for the MEI Today
The MEI can have two main types of income: pro-labore, which is considered taxable income, and distribution of profits, which can be exempt or partially taxed.
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Those without an accountant should calculate the exempt portion of profit based on fixed percentages set by the Federal Revenue Service: 8% for trade, 16% for transport, and 32% for services.
The remaining amount is considered taxable profit and must be added to the pro-labore in the income tax declaration.
Those with accounting can prove the actual profits and thus fully exempt the distribution of profits, provided the amount does not exceed R$ 600 thousand per year under the new rules.
This difference explains why many MEIs end up paying taxes unnecessarily.
The absence of formal accounting makes the Revenue Service presume that part of the profit is taxable, while proper accounting provides technical support for total exemption within the annual limit.
What Changes with the New Exemption Threshold of R$ 5,000
With the new threshold, those who receive up to R$ 5,000 monthly in taxable income will no longer have to pay income tax and will not be required to declare, which includes some MEIs who combine self-employment activities with formal employment (CLT).
This change, however, only takes effect in 2026 and will be valid for declarations made in 2027, concerning the 2026 base year.
In other words, in 2025, nothing changes for the individual micro-entrepreneur, who will continue to follow the current rules.
In practice, the impact will be greater for those who receive pro-labore or other incomes combined with the MEI, such as CLT salaries.
If the total annual taxable income remains below R$ 60 thousand (R$ 5,000 x 12 months), the taxpayer will be exempt from submitting the declaration.
MEI With and Without Accountant: Important Differences
Those who maintain professional accounting continue to have an advantage. The MEI with an accountant can distribute profits 100% exempt from income tax, provided the annual amount does not exceed R$ 600 thousand.
Above this limit, taxation applies according to the new rules of the reform.
The MEI without an accountant needs to apply the presumed percentages defined by the Federal Revenue Service, which reduces the amount considered exempt.
In practice, this means that part of the profit will be treated as taxable income, which may require the micro-entrepreneur to declare and pay taxes even with revenue within the limits of the simplified regime.
Maintaining regular accounting, therefore, can avoid unnecessary tax payments and ensure complete exemption of profits, within the legal limits.
When Does the MEI Need to Declare Income Tax
Even with the new exemption threshold, the MEI is still required to declare in some cases: when they have taxable income above the exemption limit, when they receive pro-labore, or when they combine MEI and CLT incomes that exceed the annual ceiling of R$ 60 thousand.
For example, a micro-entrepreneur who earns R$ 81 thousand per year and takes a pro-labore of a minimum wage monthly (R$ 18 thousand per year) may exceed the limit depending on the type of activity and the part of the taxable profit calculated.
If the total taxable income exceeds R$ 60 thousand, they are once again required to declare income tax.
For those with an accountant who prove actual profit, the amount distributed up to R$ 600 thousand remains fully exempt, even if there is pro-labore or other incomes within the limits.
The Impact for Those Who Are MEI and Also CLT
In the case of those who accumulate both sources of income, the calculation of income tax considers the sum of the salary with the pro-labore and the taxable portion of the profits.
Thus, a worker who receives two minimum wages in formal employment and also withdraws amounts from the MEI may exceed the exemption limit.
The new rule brings some relief, as it expands the exemption threshold and reduces the number of micro-entrepreneurs required to declare, but does not change the treatment of profits until the new model takes effect in 2026.
Profits Up to R$ 600 Thousand Remain Exempt with Accounting
The main point of attention is that the reform does not change the exemption of profits up to R$ 600 thousand annually for those who maintain accounting.
This threshold remains valid and guarantees legal security for those who correctly formalize their accounting records.
Above this amount, the profits become partially taxable, which reinforces the need for professional control.
The Federal Revenue Service trusts accounting but presumes taxation for those without accounting books, which is why many MEIs end up paying undue taxes due to lack of proper registration.
What Changes to Take Effect Only in 2026
All changes to the income tax table only take effect from the income received in 2026, declared in 2027.
Until then, the same current rules apply.
The individual micro-entrepreneur should continue to calculate the exempt profit and the taxable profit according to the fixed percentages, paying special attention to the pro-labore and the total of incomes.
Those who get ahead and formalize their accounting will be prepared to take advantage of the benefits of the new legislation without surprises during the transition.
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