PGBL: deadline to deduct up to 12% on Income Tax ends in December

With the end of the year approaching, taxpayers should be aware of the deadline to take advantage of the tax benefit of the Free Benefit Generator Plan (PGBL) in the next income tax season.

This is considered a smart way to reduce the tax base in the annual tax return. However, to benefit from this option when filing the Annual Adjustment Return in 2026, it is essential to pay attention to the rules and deadlines.

What is PGBL and how does it reduce income tax?

PGBL is a type of private pension plan that allows contributions made to the plan, up to a limit of 12% of gross annual taxable income, to be deducted directly from the tax base.

This means that by investing in a PGBL, taxpayers can increase their refund if they have had tax withheld throughout the year, or reduce the amount payable if the final adjustment is unfavorable.

In addition to the immediate tax benefit, the PGBL also functions as a long-term pension planning tool.

Deadline for securing the tax benefit

To access this benefit in 2026 (referring to the 2025 calendar year), it is mandatory that the plan be contracted or additional investments be made by December 30, the last banking day of this year. Even so, it is still advisable not to leave it until the last minute.

Who can deduct contributions to the PGBL?

The tax benefit is only valid for taxpayers who opt for the full tax return form and contribute to Social Security or to the civil service pension scheme.

It is worth remembering that those who use the simplified tax return form cannot deduct contributions to the PGBL.

Taxation methods upon redemption of PGBL funds

The taxpayer can choose the tax regime that best aligns with their financial planning. There are two models:

Progressive taxation (subject to adjustment in the Annual Income Tax Return): Follows the same brackets as the Income Tax table, with rates ranging from 0% to 27.5%. It is recommended for those planning short- or medium-term redemptions with lower income purposes. A 15% withholding tax is applied at the time of redemption, with a subsequent adjustment in the Annual Income Tax Return, which may reach a rate of up to 27.5%.

Regressive taxation (definitive): The tax rate decreases according to the length of time in the plan, starting at 35% and reaching 10% after 10 years. It is an advantageous option for those who plan to accumulate funds over long periods, with a view to retirement.

Count on specialized support

DPC has an exclusive center for serving individuals, ensuring agility, proximity, and total confidentiality in the handling of information. Our team assists in tax, social security, and asset planning, offering personalized guidance so that taxpayers can make safe decisions. Count on this support: dpc@dpc.com.br.