Income Taxation

New Rules for Brazilian Individuals

Income tax reforms have launched a major overhaul of Brazil’s tax laws, directly affecting millions of individuals. Issued in November 2025, Law No. 15,270 has lifted the income tax exemption bracket for lower-income earners, benefiting an estimated 15 million taxpayers. To offset the revenue shortfall, a minimum individual income tax (IRPFM) was introduced to target annual incomes above BRL 600,000. The law also began imposing a 10% withholding tax on profits and dividends paid to non-resident individuals, who were previously exempt.

At the same time, the law has left certain aspects of the taxation of profits and dividends unresolved, raising concerns among taxpayers and companies alike. Questions persist around the possibility of double taxation and the operational complexity of the IRPFM, which requires consolidated calculations and a series of offsets. Uncertainty remains as to the tax treatment of profits retained through 2025 and how deductions tied to the effective tax rates for legal entities will work in practice.

Practical implementation will likewise demand attention in 2026. The IRPFM will require updates to the Brazilian Federal Revenue Service’s systems and greater transparency from companies regarding their effective rates. In this scenario, the transition period is likely to prove sensitive and may give rise to significant legal disputes.

The new law may curtail or reshape incentivized tax regimes, increasing the tax burden and requiring a review of existing structures. Companies should map the impacts, reassess available benefits, adjust contracts and operating models, and plan proactively to mitigate risks and preserve tax efficiency

Alessandro Amadeu da Fonseca

Partner – Private Client

The new rules add complexity to legal entities, as the effective corporate tax (IRPJ/CSLL) burden feeds into the calculation of the minimum tax for individuals and the corresponding tax refund. Companies will also need to segregate their shareholder base according to the applicable tax treatment, which, from an operational standpoint, will be a particularly challenging exercise for publicly-held companies

Flavio Mifano

Partner – Tax

For individuals with annual incomes above BRL 600,000, the new law imposes a minimum income tax rate of up to 10%. Dividends will also be subject to taxation following the repeal of an exemption that was in place since 1996