The measure establishes taxation on dividends to offset the loss of revenue resulting from the income tax exemption for those earning up to R$5,000 per month.
By Rafael Maniero and Mauricio Nucci
—
Legale Overseas, no. 954.
On October 1, the Brazilian Chamber of Deputies approved Bill No. 1,087/2025, which provides for an Income Tax exemption for individuals earning up to R$ 5,000, establishes taxation on dividends, and sets a minimum tax for high-income individual taxpayers, defined as those with annual earnings exceeding R$ 600,000.
The proposal, scheduled to take effect in the 2026 fiscal year, changes the personal income tax table, exempting monthly earnings of up to R$ 5,000 and reducing the tax for those earning between R$ 5,000 and R$ 7,000.
Dividend taxation will apply only to monthly earnings exceeding R$ 50,000, at a rate of 10%, which will have significant impacts on holding structures, including real estate companies, asset managers, and others that typically distribute dividends to individual taxpayers.
The minimum rate for high-income taxpayers will range from zero to 10% for those with annual earnings between R$ 600,000 and R$ 1.2 million, while those with annual income above R$ 1.2 million will have a minimum rate of 10%.
For the purpose of calculating annual income, even tax-exempt earnings, those subject to a zero rate, and earnings taxed exclusively will be considered, with deductions only for certain amounts, such as those received as advance inheritance or gifts.
Additionally, the proposal establishes that dividends sent abroad will be taxed at source at a rate of 10%, without any distinction of amounts.
It is also provided that if there is a decision to distribute accumulated profits this year, the Income Tax exemption will be maintained even if payment occurs later. In this way, companies still have time to organize an action plan.
The measures above are not yet final, as they depend on consideration by the Brazilian Federal Senate and presidential approval. However, the bill has been treated as a priority by the Government, which is expected to pressure the Chamber to expedite its processing.
The team at Vaz de Almeida Advogados has extensive expertise in tax planning and is prepared to advise companies on the impacts of this proposal and assist in strategic decision-making.
Translation Disclaimer
This document was originally drafted in Portuguese and subsequently translated into English using artificial intelligence (AI).
—
Follow us on LinkedIn >
People & Community >
Meet Our Leaders >
Awards, Seals, and Recognitions >
News: Quality Content on Our Portal >
—
Tax Law >
Corporate Law >
Automotive Sector Relations >
Conflict Prevention and Resolution >
Labor Relations, Global Mobility, and People Management >
Intellectual Property >
ESG, Environmental, and Sustainability >
Innovation, Digital Law, and Cybersecurity >
Infrastructure, Real Estate, and Construction Law >
Administrative, Public, and Regulatory Law >
—
Our publications aim to communicate the legal perspective on relevant developments and provide context to the most significant legal events that may affect companies and organizations. Specific cases require personalized technical attention to the facts and should seek customized legal advice before taking any legal or paralegal action. If you, your company, or your board of directors need counsel, contact a trusted attorney.
«Legale», «Legale Overseas», «Articles», «Especial», «Tax Panel», «Tax Alert», «Projects» e «News & Alerts» are periodic publications intended as a service to the business community. These materials may include links to third-party websites to facilitate access to referenced services and publications. However, we are not responsible for the integrity of third-party links, which may encounter issues such as server failures, network security vulnerabilities, or other accessibility problems.
—
+55 19 3252-4324
Barão de Itapura, 2323
8th floor, Guanabara
Campinas, SP
Brazil
