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With the New Income Tax Exemption, the Rules Will Take Effect in 2026 After Presidential Sanction, Preserving the Base Table and Applying an Automatic Deduction That Reduces the Tax for Incomes Up to R$ 7,350
The new income tax exemption was approved by Congress and awaits presidential sanction to take effect on January 1, 2026. The design preserves the current base table and creates a mechanism for automatic deduction to relieve those earning just above the floor, reducing taxation on monthly incomes between R$ 5,000 and R$ 7,350.
In practice, the new income tax exemption meets the goal of expanding relief without re-indexing the entire table. The model prevents taxpayers immediately above the limit from falling into full taxation, smoothing the tax due curve and broadening the reach of the benefit.
When It Goes into Effect
The change will take effect starting January 1, 2026, after presidential sanction.
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The government accelerated proceedings in 2025 to respect the principle of previousness, a legal requirement for tax alterations. Without sanction in 2025, it would not apply in 2026.
For the taxpayer, this means that income received in 2026 will be calculated under the new arrangement.
Payrolls, withholdings at source, and income tax projections will need to adjust at the turn of the fiscal year.
What Changes and What Remains
The base table remains as a reference for those earning above R$ 7,350.
The progress is in the automatic deduction that zeros out or reduces the tax up to R$ 7,350, especially protecting those just above R$ 5,000.
The target is the entry threshold for the tax, preventing loss of net income due to the step effect.
Currently, the practical exemption reaches up to R$ 3,036 per month due to the simplified deduction of R$ 607.20.
With the new income tax exemption, relief is expanded through automatic deduction, without rewriting the entire table. The mechanism acts as a “transitional cushion”, reducing the effective rate at low incomes.
How Automatic Deduction Works
The automatic deduction will be applied monthly, at source, for those earning between R$ 5,000 and R$ 7,350.
The goal is to reduce the effective rate and prevent the net salary from falling below the expanded exemption threshold.
There are no structural changes in the higher brackets, but there is measurable relief in this income window.
For HR, the impact is operational: parameterizing payroll systems, reprogramming withholdings, and updating reports.
For individuals, the effect appears in the payslip and then in the annual adjustment, with less risk of tax owed in this bracket.
Current Situation and Transition
Until the turn of 2025 to 2026, the current model remains in effect, with practical exemption up to R$ 3,036 through the simplified deduction.
The new income tax exemption replaces the relief logic for the bracket up to R$ 7,350 with the new deduction.
The taxpayer does not need to request anything: the adjustment is automatic after the sanction and usual regulations.
It is important to reinforce that the base table is not fully adjusted, which preserves the progressive structure for higher incomes while softening the entry into the tax for incomes of R$ 5,000 to R$ 7,350.
Practical Effects on the Wallet
For those who are exempt or close to it, the new income tax exemption makes the effective rate lower or null up to the new ceiling.
For those who are slightly above, the deduction lowers the tax owed and increases the net.
Progressivity is preserved, but the tax threshold becomes smoother.
In terms of planning, 2026 payslips should reflect lower withholdings in this bracket.
In the following year’s declaration, the expectation is for fewer adjustments to pay for incomes up to R$ 7,350, aligning payroll and annual adjustment.
What to Observe Until the Sanction
While the sanction has not occurred, the current rules apply. Companies and taxpayers must monitor the presidential act and complementary regulations that detail the application of the automatic deduction in the routine of the paying source and in the DIRPF of the next cycle.
No change in the central logic is expected: calendar in 2026, base table maintained, and automatic deduction active.
The new income tax exemption expands relief for low and lower-middle-income without altering the entire table and will enter the payslip starting in 2026, with automatic deduction to soften taxation up to R$ 7,350.
The practical message is simple: adjustment of systems in companies, checking payslips, and paying attention to implementation regulations.
Do you want me to simulate the effective rate for your salary range with and without the new income tax exemption and already deliver a step-by-step for HR or for your financial planning?
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