Brazil Raises Income Tax Exemption to R$5,000 as Lula Prepares National Address

Overview

• Workers earning up to R$5,000 per month will be exempt from income tax, with automatic progressive discounts for salaries between R$5,000 and R$7,350.
• Receita Federal’s CETAD estimates roughly 25 million people will benefit by 2026, and state tallies show sharp gains in fully exempt filers across Rio Grande do Sul, Rio de Janeiro, Paraná, Mato Grosso do Sul and Piauí.
• Withholding will reflect the new table starting in January 2026 payrolls, and the changes will be captured in next year’s annual tax returns.
• Fiscal offsets include a minimum effective tax for annual incomes above R$600,000 with rates rising to 10%, plus taxation of dividend remittances, which government technicians say should raise about R$34.1 billion against an estimated R$31.2 billion cost.
• Lula recorded a six‑minute nationwide TV and radio address for Sunday to spotlight the measure after sanctioning the law on Nov. 26, a ceremony noted for the absence of the Chamber and Senate presidents.