ITCMD in 2026: New rules may make the transfer of assets more expensive

State laws are currently being amended, and the tax burden on gifts and inheritances is expected to increase

Complementary Law No. 227/2026 addresses various issues related to the Estate and Gift Tax (ITCMD). Among the changes, the law establishes progressive tax rates, subject to the cap set by the Senate.

Thus, states that currently use a flat tax rate will implement progressive tax brackets ranging from 2% to 8%. This change may result in a higher tax burden for taxpayers in certain areas.

This factor alone should bring estate and wealth planning into sharp focus, as it is essential, in this new landscape, to prepare for the upcoming legislative changes.

In addition to the mandatory progressive tax structure, there are other significant changes, such as:

ITCMD Tax Base

As defined by Law 227/2026, the ITCMD tax base is the market value of the asset or right being transferred. It is important to note that this may include intangible assets such as expected future profits (goodwill).

Another aspect is that, in the case of financial investments, the tax base will correspond to the market value of the investment on the date of the triggering event.

This change has implications for tax planning through holding companies, prompting those who intend to use this mechanism to rethink their strategy.

Aggregation of successive gifts between the same donor and donee

Federal law also provides that, in the event of successive gifts between the same donor and the same donee:

• all transfers will be taken into account, within the time limit set forth in state tax legislation;
• the tax amount will be recalculated for each new donation by adding the values of the assets previously transferred to the tax base; and
• the amount due will be the ITCMD tax owed, less any amounts previously paid, taking into account the progressive tax rate based on the total value of the donations during the period.

ITCMD on assets abroad and exemption from tax on VGBL and PGBL

The legislation also established rules for the collection of the ITCMD tax on assets held abroad, addressing various situations.

It also provided that the tax does not apply to private pension plans structured as insurance policies, including VGBL (Free Life Insurance Benefit Generator) and PGBL (Free Benefit Generator Plan) plans.

ITCMD collection in the states

Since the federal law was enacted in January 2026, state legislatures are currently in a transition phase and debating local bills.

Some states had already applied progressive tax rates even before Complementary Law No. 227/2026. Others are still operating with fixed tax rates, a practice that is expected to continue for only a short period of time.

Taxpayers should be aware of the opportunity to transfer assets before the changes are implemented. These adjustments toward progressive taxation are expected to result in increased tax rates for certain asset brackets.

In São Paulo, for example, the current ITCMD tax rate is set at 4%. Bill No. 409/2025, however, provides for progressive taxation, with rates ranging from 2% to 8%.

As an example, the State of Rio de Janeiro already applies progressive tax rates ranging from 4% to 8%.

It is also worth noting that, to date, most states have not enacted laws regulating the end of the annual exemption threshold for tax-exempt donations, as provided for by Complementary Law No. 227/2026.

Key considerations regarding inheritance and gifts

The changes introduced by Complementary Law No. 227/2026 usher in a new landscape for the taxation of inheritances and gifts in Brazil.

For taxpayers who hold significant assets or intend to make gifts, plan for succession, or structure a holding company, this is a time that calls for analysis.

Furthermore, since the implementation of the new rules also depends on each state’s legislation, there may be windows of opportunity during the transition period. This makes it especially important to monitor legislative changes and simulate different scenarios before taking any action.

In this context, specialized tax advisory services can assist in developing a plan tailored to the individual’s objectives.

The DPC Private division of Domingues e Pinho Contadores provides this support, ensuring that taxpayers can proceed with confidence in their asset management decisions. Contact us at: dpc@dpc.com.br.