In a significant move toward social justice and financial relief, Brazil’s Chamber of Deputies (the lower house) unanimously approved a bill that would increase the monthly income threshold exempt from income tax to 5,000 reais.

What was approved — and how it helps 💡

• The new exemption would more than double the previous threshold, meaning individuals who earn up to 5,000 reais per month would pay no income tax.
• It is estimated that about 15 million workers could see immediate relief if the law takes effect. AP News +1
• To balance the government’s budget, the bill also introduces a minimum effective tax rate on very high earners (those making over 600,000 reais annually). AP News +1
• Additional changes include easing the tax burden even for those earning between 5,000 and 7,350 reais monthly, so more middle-income earners also feel some benefit. Reuters

The politics, the promise, and public reaction 🏛️

• Despite lacking a majority in the lower house, President Luiz Inácio Lula da Silva saw unanimous support for the measure — an indication of the political weight behind tax fairness. AP News +1
• Lula celebrated the vote as “a victory in favor of tax justice and the fight against inequality.” AP News +1
• Analysts believe this move may also help the administration gain political momentum ahead of upcoming elections, as it directly impacts the financial wellbeing of many. Reuters +1

What’s next: Senate, signature, and timeline ⏳

The bill now moves to the Senate for approval. If passed, President Lula is expected to sign it into law, and the new tax regime would take effect January 1, 2026. AP News +1

Many eyes will be on how senators respond, and whether adjustments will be made to the version approved by the lower house.

Challenges & questions ahead 🤔

• How will the government fully offset revenue losses from this large increase in tax exemption? The proposals include higher taxes on the wealthy and taxing dividends. Reuters +1
• Will the new rules remain as passed, or will the Senate alter thresholds or rates?
• Can the state fiscal machines adapt smoothly to the new regime, to avoid gaps in public services or budget shortfalls?
• How will individual taxpayers react — especially those who are just above the new threshold, or who depend on deductions and credits under the older system?

Why this matters, deeply 

This measure is about more than taxation. It’s about dignity: letting people keep more of their earnings, reducing financial stress, and narrowing inequality.

For many low-income Brazilians, a few extra reais in hand each month can mean access to better nutrition, medicine, or schooling. For the country as a whole, it signals a shift in priorities: toward social inclusion, fairness, and the acknowledgment that tax systems should protect—not punish—the less privileged.