On November 26 2025, the president of the Republic of Brazil signed Law Act No. 15,270/2025, converting Bill No. 1,087/2025 into statute after its approval by the National Congress. The act broadens the range of individual income tax exemptions and introduces taxation on dividends received by individuals.
The new tax is being referred to as the minimum income tax for high-income individuals and results from ongoing discussions in Brazil regarding taxation of the so-called super-rich.
The income tax exemption
The version of the bill approved by the Senate includes a wider exemption bracket than the version previously passed (of BRL 5,000) by the House of Representatives. Beginning in 2026, individuals earning up to BRL 7,350 per month will be exempt from the individual income tax. This measure represents an effort to reduce the tax burden on those at the bottom of the Brazilian socioeconomic pyramid.
Dividend taxation
At the same time, the bill seeks to reach the top of the pyramid by taxing dividend income above certain thresholds considered to apply to ‘super-rich’ individuals.
In numerical terms, individuals who receive more than BRL 50,000 per month from a single company, or more than BRL 600,000 in total annual gains, will be subject to taxation at rates of up to 10%, which applies when the amount received exceeds BRL 1,200,000. A reduction factor will be applied when the sum of the effective rates exceeds the corporate income tax burden (34%).
The tax base will include taxable income, exempt income, and income from financial investments, except for certain incentivised investments. It also includes anticipated inheritance distributions and other exclusions, even though the new additional tax rate only applies to income over the threshold.
Non-resident investors will also be taxed at a flat rate of 10%, with no exempt amount. There are a few exceptions, such as dividends paid to foreign governments, provided there is reciprocity of treatment with respect to income earned in their jurisdictions by the Brazilian government, and foreign entities whose primary activity is the administration of social security benefits, such as retirement and pension plans. They may claim a tax credit if their combined effective taxation exceeds the 34% corporate rate.
Because this measure will probably enter into force in 2026, companies intending to pay dividends should consider assessing and approving such payments before year-end. The bill provides that only profits declared for distribution by December 31 will not be subject to the new tax. Payments, however, may occur until 2028.
This provision has generated concern because, with respect to profits earned in 2025, it may be difficult to consolidate earnings and formalise distribution decisions by that date. Under Brazilian corporate law, such decisions are typically made at the end of the first quarter of the following year.
Taxpayers, companies, and investors should closely monitor the regulatory developments and consider planning to mitigate exposure to the new rules. As the bill moves towards implementation in 2026, careful structuring will be essential to optimise tax outcomes.
