Federal Revenue Service updates income tax rules for profits, dividends, and foreign income

Regulatory instruction consolidates important aspects of high-income taxation

Published on December 18, RFB Regulatory Instruction No. 2,299/2025 deals with general taxation rules relating to Individual Income Tax (IRPF), detailing rules related to profits and dividends and income abroad, among other updates.

The regulation promotes compliance with recent legislative changes in order to ensure the correct application of tax legislation. Among the measures, the following stand out:

Taxation of profits and dividends

The rule establishes that, as of January of the calendar year 2026, the payment of profits and dividends by the same legal entity to the same individual resident in Brazil in an amount exceeding BRL 50,000.00 in the same month is subject to withholding tax at a rate of 10% on the total amount.

Taxation of income paid to residents abroad

The Regulatory Instruction reiterated that income paid to residents abroad, whether from employment or self-employment, and even in cases of services rendered, remains subject to withholding income tax at a rate of 25%.

On the other hand, there was a significant change in the legislation as a result of a Binding Decision by the Supreme Court, which made clear the unconstitutionality of withholding income tax at a fixed rate of 25% on retirement and pension income paid to residents abroad. Thus, it was decided that this income will now be taxed at source according to the progressive monthly table.

Monthly tax reduction table

Valid from January 2026, the main change in the table is the expansion of the income tax exemption bracket, covering those who earn up to BRL 5,000.00 per month. In addition, there is a reduction in the tax rate for the income bracket between BRL 5,000.01 and BRL 7,350.00.

The Federal Revenue Service consolidates and provides additional guidance related to the application of the new legislation here.

IRPF table update

The annexes dealing with the monthly and annual progressive tables have been amended and compiled.

Betting

With regard to sports betting, fantasy sports, and online games, the legislation stipulates that taxpayers must calculate, in March 2026, the value of net prizes earned in the previous year. If this exceeds the first exemption bracket in the annual table, tax will be levied at a rate of 15%. It is worth noting that such income is subject to definitive taxation, i.e., without the right to annual adjustment.

In turn, betting operators will be required to provide “ComprovaBet,” a proof of results for declaration purposes.

Tax support

Domingues e Pinho Contadores has a team of specialists who advise individuals and companies on the application of tax legislation. You can count on their up-to-date perspective, aligned with best tax practices: dpc@dpc.com.br.