Brazil’s Lower House Unanimously Backs R$5,000 Income Tax Exemption, Sends Bill to Senate

Overview

• The Chamber approved the government’s bill 493–0, keeping full exemption up to R$5,000 per month with a tapered discount to R$7,350.
• Funding relies on a minimum income tax rising to 10% for top earners and a 10% withholding on monthly dividends above R$50,000.
• Arthur Lira accepted only 3 of 99 amendments, including a transition that leaves 2025‑accrued dividends exempt if approved by year‑end and paid through 2028.
• The text adds automatic quarterly transfers via FPE/FPM to offset subnational losses, though governors and mayors still contest full neutrality on payrolls.
• Estimates suggest 10–16 million beneficiaries and a fiscal cost in the R$25–31 billion range, with the government targeting implementation in 2026.