What changes in individual income tax (IRPF) for high-income earners

New rules cover total annual income, minimum taxation, and dividend distributions

Law No. 15,270/2025 introduced changes to the taxation of Individual Income Tax (IRPF) for 2027, based on the 2026 tax year. Among the changes, the law established a minimum tax for annual income exceeding BRL 600,000.

The tax rate will increase progressively and may reach 10% for individuals earning BRL 1.2 million or more per year.

In practice, this means that the total income received during the year will be considered, including salaries, dividends, rental income, financial income, and other capital gains. The effective percentage of tax already paid will then be assessed.

If the overall tax burden is below the applicable minimum rate, the taxpayer will be required to pay the difference. For example, an individual with annual income of BRL 1.2 million who has already paid 8% in Income Tax may only need to pay the remaining 2%. On the other hand, taxpayers who have already been subject to taxation above the applicable minimum rate will not be required to make any additional payment.

It is important to note that certain types of income are excluded. The main exclusions are:

• Capital gains (except those arising from transactions on the stock exchange or over-the-counter market);
• Amounts received as gifts made as an advance on inheritance or as an inheritance;
• Income earned on savings deposit accounts;
• Income generated by the following securities and financial instruments: LCI; CRI; CDA; WA; CDCA; LCA; CRA; CPR; LIG; LCD; securities related to investment and infrastructure projects; investment funds that invest in such projects; and FIP-IE and FIP-PD&I;
• Amounts received as compensation for workplace accidents, material damages, including bodily injury, or moral damages, except for lost profits.

Taxation of Profits and Dividends

Another change is the 10% Income Tax withholding on profits and dividends paid by a company to the same individual resident in Brazil when the amounts exceed BRL 50,000 in a given month. This withholding may subsequently be adjusted in the annual Income Tax return, including for taxpayers whose total income is below BRL 600,000.

In addition, profits and dividends remitted abroad will become subject to a 10% tax, with no minimum or maximum threshold for its application. With these changes, the focus shifts from each individual source of income to the taxpayer’s overall tax burden, requiring greater attention to tax planning, dividend distributions, and asset structuring.

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

Specialized Advisory Services

Domingues e Pinho Contadores provides tax advisory services to individuals, assisting them in adapting to changes in tax legislation. Count on the support of the DPC Private team: dpc@dpc.com.br.