Senate postpones vote on income tax exemption up to R$ 5 to Wednesday.
A proposal to expand the income tax exemption bracket is expected to be voted on in plenary this week and is one of the Lula government's priorities.
247 -The Senate Economic Affairs Committee (CAE) postponed until this Wednesday (5) the vote on the bill that expands the income tax exemption range for those who receive up to R$ 5 per month. After this stage, the text may go to the main plenary of the House, where it may be considered on the same day.
The proposal has already been approved by the Chamber of Deputies and maintains its focus on President Luiz Inácio Lula da Silva's promise to expand tax benefits for low- and middle-income workers. The bill also provides for a minimum tax on the wealthiest, as a way to compensate for revenue losses.
The rapporteur for the proposal in the Senate, Renan Calheiros (MDB-AL), decided to maintain the original text approved by the deputies, without alterations, to guarantee that the project is approved within the deadline and can come into effect as early as 2026. According to him, changes now would require the matter to return to the Chamber of Deputies, which would delay the process.
"There is a consensus on the need to approve the measure that arises in favor of the workers of our country," said Renan. The senator acknowledged that there is room for "improvements," but stressed the importance of being "pragmatic" given the tight schedule.
Campaign promise and its impact on the 2026 elections.
Expanding the tax exemption bracket is one of Lula's main campaign promises and carries significant political weight for the 2026 elections, when the president is expected to run for another term. Currently, taxpayers earning up to R$ 3.036 per month are exempt from income tax.
Finance Minister Fernando Haddad stated that approximately 25 millions of Brazilians Those who should benefit from the measure will pay less or no income tax. In a Senate hearing, he highlighted that the minimum taxation on high incomes should reach approximately 200 taxpayers"The proposal is a matter of tax justice," said the minister.
What will the new table look like and who will benefit?
The text does not alter the current progressive income tax table, but it expands the discount mechanism to guarantee total exemption for those who earn up to R$ 5 per month.
Those earning between R$ 5.000,01 and R$ 7.350 will not be exempt, but will be entitled to a progressive discount — the higher the salary, the smaller the reduction. For incomes above R$ 7.350, the tax rate rules remain unchanged, ranging from 7,5% to 27,5%.
If approved by the plenary and signed into law by President Lula, the new model will take effect in 2026, with a direct impact on the 2027 income tax return.
Minimum taxation for high incomes
To compensate for the loss of revenue, the project establishes a minimum taxation of up to 10% on annual incomes exceeding R$ 600. The tax will be progressive, reaching a maximum of 10% for incomes above R$ 1,2 million per year.
High-income taxpayers will be able to deduct amounts already paid, and income obtained through investments such as LCI and LCA will be excluded from the tax base. According to the Ministry of Finance, the measure corrects distortions, since today high-income individuals pay, on average, only 2,5% in effective tax.
The text also stipulates that profits and dividends remitted abroad will be taxed at 10%. However, dividends accrued up to 2028, relating to the base year of 2025, will remain exempt.
During the proceedings in the Chamber of Deputies, Representative Arthur Lira (PP-AL) stated that expanding the exemption will cost... BRL 31,2 billion in 2026but will be compensated with $ 15,2 billion minimum tax on high income and $ 8,9 billion with the taxation of dividends sent abroad.
