Workers Earning R$ 5,000 Will Be the Biggest Beneficiaries of the New Income Tax Rule

Written by Fabio Lucas Carvalho

Published on 06/09/2025 at 17:43

Foto: Reprodução

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Changes In Income Tax Foresee Exemption Up To R$ 5 Thousand And Partial Discounts Up To R$ 7,35 Thousand, Impacting Millions Of Taxpayers As Of 2026.

The proposed amendment to the Income Tax under review in Congress promises a direct impact on workers’ wallets. The biggest beneficiaries will be those with a formal contract and a monthly salary of R$ 5 thousand, according to calculations presented by specialists.

Direct Gains In Salary

Those earning R$ 5 thousand a month will see a significant reduction in the withholding tax. The discount would reach around R$ 313 monthly.

In a year, considering the thirteenth salary, the accumulated savings would be R$ 4,067.

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Comparison By Salary Range

The proposal creates a earnings scale. See the simulation:

Those earning R$ 3,400 would have R$ 27.30 more per month, totaling R$ 354.89 for the year.
For salaries of R$ 4,000, the monthly gain would be R$ 114.76, with an annual impact of R$ 1,491.89.
The largest benefit appears in the range of R$ 5 thousand, with an increase of R$ 312.89 per month, accumulating R$ 4,067.57 by the end of the year.
Those earning R$ 5,500 would gain R$ 246.32 monthly and R$ 3,202.19 annually.
Starting from R$ 7,350, there is no benefit at all.

Therefore, the gains gradually decrease until they reach zero above the established range.

How The Rule Would Work

According to the proposal, there will be a variable discount that guarantees Income Tax exemption for incomes of up to R$ 5 thousand. Above this amount, the discount becomes decreasing until reaching R$ 7 thousand, according to the original idea of the government.

The report from Deputy Arthur Lira (PP-AL), however, extends this range to R$ 7,350.

Lira stated that the change could benefit 500,000 Brazilians and that the measure aims to ensure “neutrality” in the project. To take effect in 2026, the text must be approved by the Legislative.

Number Of Benefited Taxpayers

If approved, the project would exempt about 10 million taxpayers as early as 2026. The Ministry of Finance’s calculation indicates that 26 million people, equivalent to 65% of income tax filers, would not need to pay the tax. Considering the total population of the country, 87% would be exempt from paying IRPF.

Government Objective

The federal government announced in March that it intended to raise the exemption threshold from R$ 3,036, equivalent to two minimum wages, to R$ 5 thousand as of 2026. Furthermore, the proposal provides for partial exemption for salaries between R$ 5 thousand and R$ 7 thousand.

To compensate for the loss of revenue, the economic team proposed increasing taxation on the super-rich. This would affect those with a monthly income above R$ 50 thousand, which amounts to R$ 600 thousand annually. The tax on dividends cannot exceed 34% for companies and 45% for financial institutions.

Haddad Statements

During a presentation in Congress, Finance Minister Fernando Haddad highlighted the social impact of the measure. “From the perspective of income taxation, unfortunately, we have a very dramatic picture. Because I often say that the resident of the penthouse does not pay condominium fees, and the doorman is paying the condominium fees of the same building. This is the truth about Brazil, it is the reality of Brazil,” he stated.

Criticisms From Specialists

Despite the government’s defense, analyses indicate that the measure benefits the middle class more. Data from PNAD, collected by LCA Consultores, shows that only 32% of Brazilian workers, those with salaries above two minimum wages, will see gains. In other words, the majority of workers are already exempt under current rules.

In practice, the government would increase taxation on the richest 1% to transfer income to a group also located at the top of the pyramid.

Workers Earning R$ 5,000 Will Be the Biggest Beneficiaries of the New Income Tax Rule

Changes In Income Tax Foresee Exemption Up To R$ 5 Thousand And Partial Discounts Up To R$ 7,35 Thousand, Impacting Millions Of Taxpayers As Of 2026.

Direct Gains In Salary

Comparison By Salary Range

How The Rule Would Work

Number Of Benefited Taxpayers

Government Objective

Haddad Statements

Criticisms From Specialists

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Workers Earning R$ 5,000 Will Be the Biggest Beneficiaries of the New Income Tax Rule

Changes In Income Tax Foresee Exemption Up To R$ 5 Thousand And Partial Discounts Up To R$ 7,35 Thousand, Impacting Millions Of Taxpayers As Of 2026.

Direct Gains In Salary

Comparison By Salary Range

How The Rule Would Work

Number Of Benefited Taxpayers

Government Objective

Haddad Statements

Criticisms From Specialists

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Australia prepares to dredge 96.5 million m³ in Moreton Bay to deepen, widen, and realign channels of the Port of Brisbane, in a project of up to 25 years designed to accommodate larger ships and enhance maritime safety and regional port efficiency.

A robot named Walter does the work of five bricklayers per hour and can save the construction industry, where the average age of professionals is 46 years and almost no one wants to learn the trade anymore, in the United Kingdom.

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