Brazil Income Tax Brackets 2026: The New R$5,000 Exemption, Old vs. New
Llandora·Updated 2026-10-14
⚠️ Disclaimer: For general information only — not tax, financial, legal, or medical advice. Figures may be outdated or incorrect; tax rules change frequently. Verify important decisions with the CRA/IRS or a qualified professional (for health topics, a licensed healthcare provider). You use this information at your own risk.
The short answer
Brazil rewrote its personal income tax for 2026: the law signed by President Lula on November 26, 2025 makes monthly income up to R$5,000 fully exempt from Imposto de Renda, with partial relief for income between R$5,000 and R$7,350. The short answer is that if you earn R$5,000 a month or less in 2026, you owe no income tax on it; earn more and the progressive rates of 7.5%, 15%, 22.5% and 27.5% still apply above R$7,350. One timing trap matters: the return filed in March–May 2026 covered 2025 income under the old rules — the new exemption applies to income earned from January 2026.
The new rules (income from January 2026)
Up to R$5,000/month: fully exempt. No income tax at all on this slice.
R$5,000–R$7,350/month: partial relief. A discount that phases down across this band — larger near R$5,000, smaller near R$7,350 — so the effective rate climbs gradually rather than jumping.
Above R$7,350/month: the old progressive rates apply. 7.5%, 15%, 22.5% and 27.5% on the slices above the threshold, as before.
The government estimates roughly 15 million Brazilians benefit directly: about 10 million stop paying the tax entirely and 5 million pay less. Note that the same law also introduced a 10% withholding tax on monthly dividends above R$50,000 starting in 2026 (Lei 15.270/2025).
The old monthly table (for comparison)
The progressive monthly table used for 2025 income — and therefore for the return filed in March–May 2026 — was:
Up to R$2,428.80: exempt
R$2,428.81–R$2,826.65: 7.5%
R$2,826.66–R$3,751.05: 15%
R$3,751.06–R$4,664.68: 22.5%
Above R$4,664.68: 27.5%
The jump from an exempt ceiling of R$2,428.80 to R$5,000 is the single biggest change in the 2026 reform — more than doubling the tax-free band.
What this means in practice
Withholding (IRRF). Employers withhold income tax from paychecks each month, so most salaried workers felt the change from their first 2026 paycheck — smaller or zero withholding for anyone under R$5,000/month. The annual return then reconciles withholding against the final calculation.
Annual filing still matters. Being exempt from the tax is not the same as being exempt from filing: if you meet any of the Receita Federal's mandatory-filing criteria (which go beyond income level), you still file a return — you just owe nothing.
Frequently asked questions
Q: I filed my 2026 return in April 2026. Why didn't the R$5,000 exemption apply?
A: Because that return covered your 2025 income, taxed under the old rules. The new exemption applies to income earned from January 1, 2026 — it will show up in the return you file in 2027.
Q: I earn R$6,000 a month. How much do I save?
A: You fall in the R$5,000–R$7,350 partial-relief band, so you pay less than under the old table, with the discount shrinking as income rises toward R$7,350. The exact saving depends on the official phase-down schedule — check the Receita Federal tables rather than estimating.
Q: Does the exemption apply to all income, like capital gains or rental income?
A: The R$5,000 exemption targets monthly taxable income (primarily salaries); other income categories have their own rules. Treat each income type separately.
Q: Will the R$5,000 figure be adjusted for inflation?
A: No automatic adjustment exists — the 2026 law contains no indexation (it only requires the Executive to propose a national update policy within a year); thresholds in Brazil have historically been updated by new legislation rather than indexation. Check current law each year.
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