backPresident Luiz Inácio Lula da Silva has signed into law a measure that exempts all Brazilians earning up to five thousand reais per month from paying income tax and introduces reduced rates for those making between five thousand and seven thousand three hundred and fifty reais. The change, which takes effect in January 2026, is expected to remove around fifteen million people from the tax rolls, fulfilling a key campaign promise. To maintain fiscal balance, the government will increase taxation on high earners making more than six hundred thousand reais a year, applying a gradual rate capped at ten percent and leaving unaffected those who already pay that amount.
The proposal passed unanimously in the Senate and was praised by Finance Minister Fernando Haddad, who thanked Congress for ensuring the measure’s timely approval. The signing ceremony brought together several senior officials, including political rivals who had worked on the bill’s drafting. Lula described the reform as a correction of a long-standing injustice faced by Brazilian workers and emphasized the need to move forward with taxation on financial investments.
The government presents the new law as a significant step toward reducing inequality and strengthening fairness in Brazil’s tax system.
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