Senate approves income tax exemption for those earning up to R$ 5,000.

The Senate approved this Wednesday (5) the Lula (PT) government's project that exempts from Income Tax (IR) those who earn up to R$ 5,000 per month – and, in return, increases the taxation of high income. The vote was symbolic and the text was approved unanimously. Now, the proposal goes to the president for sanction. The IR exemption is one of President Luiz Inácio Lula da Silva's (PT) showcases for re-election in 2026.

The senators unanimously approved the request for urgent processing of the matter in plenary. Following this, Senator Renan Calheiros (MDB-AL), the rapporteur for the text, presented his opinion and took the opportunity to criticize Congressman Arthur Lira (PP-AL), the rapporteur in the Chamber of Deputies and his political opponent in Alagoas.

"The bill languished in the Chamber for an atypical seven months, indicating a lack of appetite, a political unwillingness to approve it," said the rapporteur. According to Calheiros, the bill faced "unacceptable political blackmail," as it was "conditioned on the approval of the 'Shielding Amendment' and even on amnesty."

"In less than a month, as announced, we are concluding the voting. The Senate, in this way, reiterates its commitment to the public interest," stated the senator, criticizing Lira's opinion. Earlier, the Senate's Economic Affairs Committee (CAE) approved bill (PL) 1.087/2025. The proposal received 146 amendments in the CAE and six in the plenary session.

However, Calheiros only accepted drafting amendments presented by Senators Eduardo Gomes (PL-TO) and Rogério Carvalho (PT-SE) in the committee. Therefore, the text will not need to undergo further review by the Chamber of Deputies.

"If we tried to solve the problems, the project would return to the Chamber, which would be equivalent to returning a kidnapping victim to their original captivity, where a new ransom would be unaffordable and would put the kidnapped person at risk of death again. Therefore, my decision was to opt for the lesser evil and avoid frustrating the population," Calheiros remarked in a speech on the floor.

Bill 1.087/2025 must be approved and signed into law by December 31st to take effect next year. The Minister of Institutional Relations, Gleisi Hoffmann, and the Executive Secretary of the Ministry of Finance, Dario Durigan, were present during the Senate vote.

Following the vote in the CAE (Committee on Economic Affairs), the president of the Senate, Davi Alcolumbre (União-AP), announced that the proposal would be the first item on the plenary agenda this Wednesday, as it "reflects the relevance of the topic to Brazilian society and the Senate's commitment to improving the national tax system."

The government submitted the bill to the Chamber of Deputies in March, but the text was only unanimously approved by the deputies on October 1st. There were 493 votes in favor and none against. Calheiros estimates that the proposal should benefit 25 million people. "Workers will have an average gain of R$ 3,500 per year," said the rapporteur.

The approved text provides for progressive discounts for those earning between R$ 5,001 and R$ 7,350. Above that amount, the current income tax table applies. To compensate for the loss of revenue, the bill creates a minimum tax for those earning more than R$ 50,000 per month.

The proposal establishes the gradual application of the Minimum Personal Income Tax (IRPFM), from 0% to 10%, for those who receive between R$ 50,000 and R$ 100,000 per month – above the latter amount, the full tax rate will be charged.

Lula and Haddad celebrate "historic step"

On social media, President Luiz Inácio Lula da Silva (PT) stated that the approval is a historic and decisive step "towards a fairer country, with a tax system that makes contributions more balanced and recognizes the efforts of all who help build Brazil."

"I thank President Davi Alcolumbre, rapporteur Renan Calheiros, and each of the leaders who guided the process of approving the bill in the Senate, after its approval in the Chamber of Deputies. Unanimously, in both cases. A victory for democracy and social justice," said the president.

Finance Minister Fernando Haddad also celebrated the approval of the income tax exemption. "At first, there were doubts. Many people had doubts about the viability of the project, but I think the work that was done, clarifying public opinion, by each parliamentarian, I think gave a great boost to a project that will perhaps be, in my opinion, a landmark in the history of Brazil," said the minister.

Alcolumbre says income tax exemption "reflects on people's real lives"

The Senate president stated that the proposal "speaks to the real lives of people" and will bring "immediate relief to those who need it most." He emphasized that the project stimulates consumption and contributes to job creation. "At the same time, it reaffirms the principle that should guide the country's fiscal policy: progressivity. Those who earn less, pay less. Those who can afford more, contribute more," he said.

Alcolumbre highlighted the work of the deputies in approving the bill and praised Calheiros' performance as rapporteur. "Thanks to this joint effort, we ensured that the benefit will come into effect in January 2026, offering Brazilian families a more financially secure start to the year," he emphasized.

"Today we witnessed a victory for good politics, dialogue, cooperation, and commitment to the country. It's not about winning debates, but about overcoming problems with respect for differences," the senator added.