The exemption from personal income tax (IRPF) for those earning up to R$5,000 per month, which came into force on January 1, was accompanied by a new form of taxation for high-income Brazilians. Anyone earning more than R$600,000 per year will be subject to a minimum income tax rate. Not everyone in this income bracket will see a tax increase. This will depend on the taxpayer’s sources of income.
The GLOBO tool shows what the situation looks like in your case. Check it out below. Don’t see the tool? Click here.
The tool was developed under the supervision of Paulo Henrique Pêgas, professor of accounting at Ibmec-RJ.
How is the taxation of high incomes carried out?
The minimum tax rate for those earning more than R$600,000 per year starts at zero and increases gradually depending on income. The minimum rate will have a “scale”, reaching 10% only for those who earn more than 1.2 million reais per year. Check it out below.
Minimum tax rate by income bracket
| Annual income (R$) | Tax rate (%) |
| 600,000 | – |
| 650,000 | 0.833% |
| 680,000 | 1.333% |
| 700,000 | 1.667% |
| 800,000 | 3.333% |
| 850,000 | 4.167% |
| 950,000 | 5.833% |
| 1,000,000 | 6.667% |
| 1,200,000 | 10% |
These are not additional rates, but rather a minimum level of income tax payable. In other words, nothing changes for those who already pay income taxes today at levels above this minimum. This is the case for those whose income comes exclusively from salaried employment with a formal contract.
The Ministry of Finance estimates that the new system will increase taxes for only 141,000 taxpayers, who earn more than R$600,000 per year and who, until 2025, paid a rate below the minimum of 10%.
And what about those who earn up to R$5,000?
The government project provides for an income tax exemption for those earning up to R$5,000. Until 2025, only those who earned up to R$3,036 per month, or up to two minimum salaries, were exempt. From January 1, 2026, anyone earning up to R$5,000 will no longer pay IR.
In addition, there will be partial relief for those earning between R$5,000 and R$7,350 per month, with a reduction in income tax paid.
Impact on cutlery by Simples
Those who will pay the most with the new minimum rate will be taxpayers whose income comes mainly from business profits, a type of income which is currently not paid by the IRPF, estimates Pêgas.
This is the case, for example, of independent professionals who provide services through companies included in Simples, a simplified system for companies with annual revenues of up to R$4.8 million, or who collect corporate income tax (IRPJ) based on presumed profit, a modality available for companies with annual revenues of up to R$78 million.
— There are many people in the Singles who have an income of R$150,000, R$180,000, R$200,000 or R$300,000. They are independent professionals, service providers, who are part of the Simples range. Their income is high because the business has virtually no expenses and the profits they receive are fully exempt. They will therefore have to pay more, because the income tax that hits them (until 2025) is very low, says Pêgas.
According to the professor, the minimum IRPF will make the currently different treatment for taxpayers with the same income bracket more equal.
If we compare the taxation of an executive who works with a formal contract with that of a doctor who has a company to operate his practice, both with an annual income of R$5 million, the first pays much more IR.
— The manager pays an effective tax rate of 23% or 24%. The doctor, as he benefits from a series of advantages in his business, due to the presumed profit, being qualified as a hospital service, his total taxation, even including the accountant as an expense, is a maximum of 8% or 9% (effective rate). This doctor, when he invests these 5 million reais, will be broke — says Pêgas.
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