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Proposal for Income Tax Exemption for Salaries Up to R$ 5 Thousand Could Be Valid Starting in 2026
Since the beginning of 2025, the National Congress has been discussing, in an organized manner, the expansion of the Income Tax exemption. In addition, the proposal benefits workers with salaries up to R$ 5 thousand, expanding its reach. Therefore, on May 8, 2025, Deputy Hugo Motta, chairman of the Finance and Taxation Committee, made an important statement. According to him, the deadline for voting in Congress is until September 30, 2025, which demonstrates commitment to the timeline. After all, the central objective is to comply with the noventena rule, provided in Article 150 of the Federal Constitution. This rule establishes a minimum interval of 90 days between the publication and the start of validity of a new tax regulation. If the timeline is followed, the measure could come into effect starting in January 2026.
Chamber Committee Sets Timeline to Approve Income Tax Exemption Range by July
To achieve this goal, a special committee was created in the Chamber of Deputies on May 6, 2025. Rubens Pereira Júnior (PT-MA) assumed the presidency, while Arthur Lira (PP-AL) took the rapporteurship. Therefore, the committee’s plan foresees, by June 20, the holding of public hearings. In these sessions, representatives from the Federal Revenue, tax experts, and sectors of civil society will be heard. Thus, the proposal can be debated before any decision. The delivery of the final report is scheduled for June 27, with voting by July 16, before the parliamentary recess. As part of the discussions, the government suggested a minimum rate of 10% on monthly earnings above R$ 50 thousand. The government proposed this measure to balance out the revenue loss caused by the new income tax exemption range.
Deputy Hugo Motta Advocates for Balance Between Tax Exemption and Budget Responsibility
During the “Brazil Week” event held in New York on May 7, 2025, Deputy Hugo Motta stated that he would prioritize the proposal. However, he emphasized that he would maintain fiscal responsibility, as, in his words, both aspects must go hand in hand to ensure balance. Furthermore, he highlighted that it is essential to secure a stable political environment and, at the same time, legally secure to attract more investments. Consequently, this stability will help to strengthen investor confidence and simultaneously preserve the solidity of public finances. Representatives from the private sector and the press attended the event.
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Intermediate Income Range May Also Have Proportional Reduction in Income Tax
Additionally, the proposal under consideration provides for a proportional reduction of income tax for those earning between R$ 5 thousand and R$ 7 thousand, which would expand the measure’s reach. According to estimates from the Ministry of Finance presented on April 30, 2025, this change could benefit over 4 million taxpayers. The National Confederation of Trade (CNC) thus stressed that the measure, in addition to being strategic, can stimulate consumption, especially among the intermediate-income brackets. However, experts warn about the importance of assessing the medium-term fiscal impacts, which have been considered in the committee’s discussions.
Parliamentary Support Indicates Political Viability for Approval of Income Tax Exemption Proposal Still in 2025
Finally, according to a survey published by the newspaper O Globo on May 9, 2025, the project already has significant support in Congress. Moreover, at least 300 lawmakers have expressed support for the proposal, indicating strong political viability for its approval. Despite this, the process still depends on consensus, especially regarding the points of fiscal compensation, in addition to strict compliance with the established timeline. For this reason, the government considers the proposal an essential part of a continuous tax review process, precisely because it seeks to increase the progressivity of taxes. Furthermore, if Congress approves it as expected, the measure will represent a significant advance, particularly in the current debate on fiscal justice in Brazil.
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