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Those who earn up to R$ 5,000 per month will no longer pay Income Tax in 2026, retirees over 65 are exempt up to R$ 6,903, and the change benefits 16 million Brazilians
Since January 2026, workers earning up to R$ 5,000 per month are completely exempt from Income Tax. The change benefits more than 10 million people who previously paid the tax.
For retirees and pensioners over 65, the exemption is even greater. Those who receive up to R$ 6,903.98 are completely free from Income Tax thanks to the double exemption provided by law.
In total, 16 million Brazilians are benefited. Of these, more than 10 million are completely exempt, and another 5 million receive partial reduction.
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According to the Ministry of Finance, the new table has already been reflected in workers’ paychecks since February 2026.
Between R$ 5,000 and R$ 7,350 the discount is progressive: the closer to R$ 5,000, the less tax
For those earning between R$ 5,000.01 and R$ 7,350, there is a partial discount. The tax decreases gradually the closer the salary is to R$ 5,000.
The reduction formula is: R$ 978.62 minus 0.133145 times the monthly income. Above R$ 7,350, there is no reduction.
José Carlos da Fonseca, supervisor of the Income Tax at the Federal Revenue, explained: “The taxpayer who earns up to R$ 5,000 has a total reducer, and those who earn up to R$ 7,350 have a reducer that reduces the tax paid.”
Retirees over 65: the double exemption that frees up to R$ 6,903 per month
The legislation grants retirees and pensioners over 65 an additional exemption of R$ 1,903.98. Added to the new bracket of R$ 5,000, the total exempt amount reaches R$ 6,903.98.
This rule applies to beneficiaries of the INSS and complementary pensions. The discount occurs directly at the paying source.
Attention: exemption does not exempt declaration if you have assets over R$ 800,000
Fonseca warned of a common confusion: “There is confusion regarding this receipt of up to R$ 5,000 in 2026. They are exempt from paying Income Tax, but not necessarily exempt from declaring.”
Those with assets over R$ 800,000, rural income exceeding R$ 177,920, or capital gains need to declare even if exempt from payment.
According to Agência Brasil, the 2026 declaration (base year 2025) uses the previous table, with exemption up to R$ 2,259.20. The new rules only apply to the 2027 declaration.
According to G1, the exemption represents the largest expansion of the bracket in the history of Brazilian Income Tax. Brazil is approaching the standards of countries like Portugal and Chile in tax progressivity. For 16 million Brazilians, the practical result is more money in their pockets every month.
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