Lula Sanctions Project that extends income tax exemption to those earning up to R $ 5,000 per month | policy

This measure is supposed to benefit 15.5 million people, by extending tax relief to those who receive up to R$5,000 per month, and by granting a partial salary deduction of up to R$7,350. On the other hand, this creates a minimum tax on high income, starting with those who receive at least R$600,000 per year and reaching a rate of 10% on income starting from R$1.2 million per year.

The project was approved in the Senate in early November. The text increases the scope of the exemption from the current R$3,036 to R$5,000. Therefore, more people will not need to pay income tax.

Furthermore, for those who earn between R$5,000 and R$7,350 per month, discounts will be granted in a tiered manner. Exemptions and deductions will result in savings for these taxpayers.

• Anyone receiving up to R$5,000 – full exemption; You will have annual savings of R $ 4,356.89;
• Anyone who receives up to R$ 5,500 – 75% discount; You will have annual savings of R$ 3,367.68;
• Anyone who receives up to R$6,000 – 50% discount; You will have annual savings of R $ 2,350.79;
• Those who receive up to R$ 6,500 – 25% discount; You will have zero savings of R$ 1,333.90;
• Those who receive up to R$7,000 will have annual savings of up to R$605.86;
• Those earning more than R$7,350 – the progressive rates of 7.5%, 15%, 22.5% and 27.5% remain the same as today, without an increase.

The proposal also provides for, starting in 2026, a tax of 10% of earnings It is distributed to the same individual in amounts exceeding R$50,000 per month. Regarding dividends transferred abroad, the tax will be 10% on any amount distributed, and will also apply to legal entities, in addition to individuals. Currently, dividends are exempt from income tax.

The proposal was the subject of controversy among parliamentarians during its progress in Congress. The rapporteur of the motion in the Senate, Renan Calheiros (MDB-AL) did not make changes to the content of the text approved by the House of Representatives so that the text would not return to the hands of his political rival, the MP. Arthur Lyra (PP-AL). According to emedebista, this would jeopardize approval this year.

Income tax is a tax that requires an annual fee, therefore, changes in its operation must be approved in 2025 to take effect in 2026. “If we try to solve the problems, the project will return to the room. That would be tantamount to returning the kidnapping victim to the original captivity, for which the new ransom would be invaluable and would expose the kidnapped person to the risk of death,” the rapporteur announced at the time of processing.

After the vote, Lira’s advisor issued a memo in which he said that the MP’s opinion had been the target of politicization and that the unanimous approval of the text “reaffirmed the consistency of the council’s report.” The text says: “The final approval of the income tax bill in the National Congress once and for all buries the falsely based narratives and confirms what has always been clear: Congressman Arthur Lira’s report is technically consistent, fiscally neutral and socially responsible.”

Exemption from income tax on dividends exceeding R$50,000 whose distribution is scheduled until 2025 – including shares from previous years that have not yet been distributed and can be paid until 2028 – was one of the reasons why Calheiros considered the split proposal.

The parliamentarian presented two calculations that differ from the position of the lira and the Ministry of Finance on the project’s neutrality: one from the Independent Financial Institution (IFI), which indicates a net revenue loss of R$1 billion per year, and the other from the Senate consultation, which indicates a net loss of R$4 billion per year.