On Wednesday evening, 1 October, the House of Representatives approved the report presented by Arthur Lira on Bill No. 1087/25. The proposal exempts individuals earning up to BRL 5,000 per month from income tax and, as a compensatory measure, introduces taxation on earnings above BRL 50,000 per month or BRL 600,000 per year.

The approved text did not include significant changes. Out of the 99 proposed amendments, only 3 were accepted.

• Profits and dividends related to results recorded up to the 2025 tax year: exempt from income tax if the distribution is approved by 31 December 2025 and the payment, credit, allocation, or delivery occurs in the 2026–2028 tax years. 
• Income from Infrastructure Private Equity Investment Funds (FIP-IE) is excluded from the minimum tax. 
• Quarterly transfers will compensate states and municipalities for any loss of revenue, and the mechanism may also be used to reduce the Goods and Services Contribution (CBS) rate. 
• Officeholders of notary and registry offices who make mandatory remittances required by the National.  

Lawmakers debated whether to index the income-tax exemption brackets by the IPCA (Broad National Consumer Price Index). A second draft report briefly included that provision after accepting amendments, but the rapporteur later described it as a clerical error and removed it.

The final text approved by the House preserved the scope originally outlined by the Special Committee, namely:

• Income up to BRL 5,000 per month: exempt.
• Graduated Income Tax (IR) rates up to BRL 7,350 per month.
• Minimum 10% taxation on profits and dividends above BRL 50,000 per month;
• Progressive taxation for income exceeding BRL 600,000 per year.

The bill now moves to the Senate for debate and, at the final stage, returns to the House of Representatives before being submitted to the President to be signed into law.

Glossary

House of Representatives (Brazil): Lower chamber of Brazil’s National Congress; the chamber that approved the report on the bill.

Bill No. 1087/25 (Brazil): Draft federal legislation addressing the income tax exemption threshold and compensatory taxation on higher earnings.

Rapporteur (Brazil): Member of Congress assigned to consolidate, draft, and present the report on a bill for floor consideration.

Income Tax (IR) (Brazil): Brazil’s federal individual income tax; IR is the commonly used abbreviation in Brazilian materials.

IPCA (Broad National Consumer Price Index): Brazil’s headline inflation index used for indexation and policy benchmarks.

Infrastructure Private Equity Investment Funds (FIP-IE): Brazilian private equity investment funds dedicated to infrastructure; their income is excluded from the minimum tax under the bill.

Goods and Services Contribution (CBS): Proposed Brazilian federal contribution on goods and services; referenced as a rate that may be reduced under the transfer mechanism.

Notary and registry offices (Brazil): Privately held, publicly regulated entities providing notarial and registry services; amounts mandatorily remitted under CNJ rules are excluded from taxation.

National Council of Justice (CNJ): Brazilian judicial oversight and administration body that regulates mandatory remittances by notary and registry offices.

Federal Senate (Brazil): Upper chamber of Brazil’s National Congress; next stage of deliberation before return to the House and submission to the President to be signed into law.