Law No. 15.270/2025: New rules for Income Tax and taxation of profits and dividends

Published on November 27, Law No. 15,270/2025 extends the income tax exemption and begins to tax profits and dividends.

The new rules will take effect from January 1, 2026.

Income tax exemption and reduction starting in the 2026 calendar year

The law establishes:

• income tax exemption for those earning up to BRL 5,000.00 per month;
• gradual reduction for incomes above BRL 5,000.00 per month, up to BRL 7,350.00.

Monthly taxation of high incomes

Starting in January of the calendar year 2026, the payment, crediting, use, or delivery of profits and dividends by the same legal entity to the same individual resident in Brazil in an amount exceeding BRL 50,000 in the same month will be subject to withholding income tax at a rate of 10%.

Annual taxation on high incomes

Starting from the 2027 fiscal year, corresponding to the 2026 calendar year, individuals whose total income in the calendar year exceeds BRL 600,000 will be subject to a minimum Individual Income Tax (IRPF) rate. The calculation basis will include income taxed exclusively or definitively and income exempt or subject to zero or reduced tax rates.

Certain types of income are not included, such as capital gains (except those arising from stock exchange or over-the-counter transactions), inheritances, donations, accumulated income, as well as tax-exempt financial investments, savings, retirement pensions due to serious illness, and indemnities.

The tax rate is progressive from 0% to 10% for income between BRL 600,000 and BRL 1.2 million, and is set at 10% for income above BRL 1.2 million.

Profits and dividends declared until December 31, 2025, will be exempt, provided all formalities are fulfilled and paid by 2028, as specified in the approval act. However, this resolution must be evaluated considering, among other factors, the corporate structure and specifics of each company.

Taxation of profits and dividends remitted abroad

The profits or dividends paid, credited, delivered, employed, or remitted abroad will be subject to withholding income tax at a rate of 10%. There are some provisions for exemptions and the possibility of applying reductions to Corporate Income Tax (IRPJ) and Social Contribution on Net Profit (CSLL).

Tax advisory services

Domingues e Pinho Contadores offers support to companies and individuals to help them comply with tax updates. Count on the guidance of our specialized team: dpc@dpc.com.br.