Currently, individuals who earn up to 3,036 reais (485 euros) are exempt from tax.
This measure, a significant campaign promise by President Luiz Inácio Lula da Silva, received the support of all 493 members of the Chamber of Deputies present in the vote held on Wednesday, and it will now proceed to the upper house, the Senate, for review.
The Brazilian head of state responded on social media, stating that the project’s approval represents “a victory for tax justice and fighting inequality in Brazil, benefiting 15 million Brazilian workers.”
“I am confident that the proposal will also receive broad support in the Senate,” said Lula da Silva.
The text specifies that starting in 2026, a year scheduled for presidential, legislative, and regional elections in Brazil, individuals earning up to 5,000 reais monthly will not have to pay income tax.
Additionally, deputies included in the bill a tax discount for workers earning between 5,000 and 7,350 reais (1,174 euros).
The government anticipates that around 16 million Brazilians will benefit from either full or partial income tax exemption.
The proposal is expected to have an impact on public accounts amounting to 25.8 billion reais (4.12 billion euros) annually.
However, the government aims to offset the revenue loss by increasing taxes on the wealthiest individuals.
In this regard, the project envisions taxing up to 10% on those earning more than 600,000 reais (95,000 euros) annually.
According to the government, this increase will affect only 0.13% of taxpayers, who currently pay an average of just 2.54% in income tax.
