Congress Advances Fiscal Bill and Opens Path to Permanent Income Tax Exemption as São Paulo Approves 10% IPTU Cap

Overview

• The Chamber of Deputies approved the main text of a bill that revives fiscal controls and creates the Rearp regime, with government estimates indicating roughly R$19–25 billion for 2026, and the text now goes to the Senate.
• Rearp lets taxpayers update declared asset values at a 4% tax on the difference and regularize undeclared assets with income-tax treatment at 15%, with sale-lock rules and penalties defined in the bill.
• The package tightens PIS/Cofins credit compensations, limits documentary-only incapacity benefits to 30 days (Atestmed), folds Pé-de-Meia into the education floor with no fund cap, and caps inter-regime pension offsets, while broader Seguro-Defeso cuts were partly blocked.
• In a separate joint session, Congress approved PLN 1/2025 removing the five-year limit in the budget law, clearing the way to make an IR exemption up to R$5,000 permanent if the Senate passes the separate income tax bill.
• The São Paulo City Council passed an IPTU base revision with a 10% annual cap for homes and businesses, higher exemption bands and ZEIS exemptions through 2030 covering about 313,000 units, and the measure awaits Mayor Ricardo Nunes’s sanction for 2026 implementation.