The Federal Senate has approved and sent to presidential sanction Bill No. 1,087/2025, which promotes a broad reformulation of the Individual Income Tax (IRPF).
Check out the main changes in the calculation and collection of the tax:
- Expansion of the IRPF exemption range to monthly incomes of up to BRL 5,000 or BRL 60,000 per year.
- Partial reduction of taxation for income between BRL 5,000.01 and BRL 7,350.
► Taxpayers earning more than BRL 7,350 per month or BRL 88,200 per year will not benefit from any reduction in the tax due.
- Taxation of 10% on profits and dividends exceeding BRL 50,000 per month, paid to individuals residing in the country, with no deductions allowed in the calculation basis.
► The taxation does not apply to profits and dividends earned up to the 2025 calendar year and whose distribution is approved by December 31, 2025.
- Taxation of 10% on profits and dividends remitted abroad, with individuals or legal entities as beneficiaries.
- Creation of the Minimum Income Tax (IRPFM), payable by individuals with annual income above BRL 600,000, with an additional rate of up to 10%.
► The IRPFM will be calculated based on all income received in the calendar year, including income taxed exclusively or definitively, and income exempt or subject to zero or reduced rates, with some deductions allowed, including:
- tax already paid or due in the year;
- capital gains income (outside the stock exchange);
- amounts received as an advance on inheritance or bequest;
- income from tax-exempt securities (e.g., LCI, LCA, FII); and
- profits and dividends earned up to the calendar year 2025 and with distribution approved by December 31, 2025.
► If the sum of the effective IRPFM rates for individual and the IRPJ and CSLL rates for legal entities exceeds the nominal rates of these taxes (34% for companies in general), an IRPFM tax reduction will be granted.
The reform of the IRPF legislation, proposed by the Federal Government, was justified by the objectives of increasing the progressivity of the tax system and reducing inequalities, with a mechanism that seeks to compensate for any losses in revenue resulting from the expansion of the exemption.
With the sanction of the Presidency of the Republic, the new rules will come into force on January 1, 2026.
The tax team at LBM Advogados is available to answer any questions on the subject.