Senate to Amend Income Tax Overhaul as Supreme Court Halts Payroll Tax Ruling

Overview

• Renan Calheiros said the Senate will suppress provisions he considers unconstitutional in the income tax bill and pursue changes without sending the main text back to the Chamber.
• The Chamber-approved plan raises the tax‑free threshold to R$5,000, applies reduced rates up to R$7,350, and sets a minimum 10% levy on annual incomes above R$1.2 million.
• Federal Revenue chief Robinson Barreirinhas argued the redesign rebalances the system without losses to states or municipalities, citing dividend taxation and quarterly federal transfers for local compensation, while CNM and state secretaries pressed for firmer guarantees.
• Supreme Court minister Alexandre de Moraes requested more time and suspended the judgment on the payroll tax exemption, pausing the case for up to 90 days after three votes deemed the 2023 law unconstitutional but preserved gradual reoneração.
• The Senate postponed a vote on final changes to the tariff‑response bill because of low quorum and will reschedule an in‑person session, as the government also prepares separate projects to rebuild fiscal compensations after the IOF MP’s rejection.