New Law 15.270/2025: What Changes in Brazilian Income Tax from 2026?

Approved on 26 November 2025, Law 15.270/2025 marks a new chapter in Brazil’s income tax system.

The bill, which went through more than eight months of debate in Congress, is centred on tax progressivity and fiscal fairness.

But what does it mean in practice for individual taxpayers? In this article, we outline the main points of the new legislation and its impact – including for UK tax residents.

Key changes for individuals

The new law introduces three major areas of direct impact for individuals:

1. New tax exemption threshold

From 1 January 2026, the way income tax is withheld on monthly earnings will change:

• Up to R$5,000: exempt from withholding tax.

• Between R$5,000 and R$7,350: progressive deductions apply.

2. Withholding Income Tax (IRPF) on Dividends

Starting January 2026, the following rules apply to the payment, credit, allocation, or distribution of profits and dividends from a legal entity to an individual resident in Brazil:

• If the total amount paid by the same legal entity to the same individual exceeds R$50,000 in a single month, the full amount will be subject to 10% withholding income tax (IRPF).

• If the payment is made by an individual or legal entity domiciled abroad, withholding applies to any amount – not just those above R$50,000.

• The 10% rate applies to the entire amount, not only to the excess over R$50,000.

  
  

3. Minimum taxation on high incomes

Another significant change is the introduction of a minimum income tax rate for individuals earning over R$600,000 per year. This will apply from the 2026 tax year, with effects in the 2027 tax return.

Here’s how it will work:

• Up to R$600,000/year: exempt from the new rule.

• R$600,000 to R$1.2 million/year: progressive rate calculated as (Income ÷ 60,000) - 10.

• Over R$1.2 million/year: minimum 10% rate.

This tax also applies to income types that were previously exempt or taxed separately, such as:

• Dividends

• Interest on net equity (JCP)

• Income subject to zero or reduced rates

How will the new income tax be calculated?

The minimum tax is calculated on the total sum of income received during the tax year, excluding the following:

• Exempt rural activity income

• Capital gains

• Inheritance and gifts

• Compensation for workplace accidents

• Savings account interest and tax-exempt investment instruments (e.g., LCI, LCA)

If the taxable income exceeds R$600,000 after these exclusions, the progressive minimum rates apply. The total tax due will be compared with the tax already paid during the year (e.g., via withholding or investment taxes). If the amount paid is less than the required minimum, the difference will be due in the annual tax return.

What about dividends – will they be taxed?

Yes.

One of the most impactful changes is the reintroduction of dividend taxation for individuals. The rule applies to dividends paid from 1 January 2026 onwards, even if they refer to profits earned in previous years.

An important exception: Dividends whose distribution is approved by 31 December 2025 and paid by 2028 will remain exempt, provided all legal conditions are met.

What should you do now?

If you are an individual earning more than R$600,000 per year or receive significant dividends:

Reassess your tax planning and prepare for 2026!

***For UK tax residents receiving dividends from Brazil:It is important to note that such income is generally taxable in the UK, unless the individual is under the Foreign Income Gains (FIG) regime, which applies to non-domiciled individuals using the remittance basis.

In most cases, the Brazilian tax paid on these dividends can be claimed as a foreign tax credit in the UK tax return. However, careful attention must be paid to the timing of the payment and distribution, as the date the dividend is considered “received” may affect eligibility for the credit.

Conclusion

Law 15.270/2025 introduces significant changes to Brazil’s personal income tax system, with a focus on tax fairness and increased contribution from higher earners. While it offers benefits to those earning up to R$5,000 per month, it requires increased attention from individuals with high incomes or those receiving dividends.

Do you require assistance in understanding how these changes apply to your specific circumstances? Schedule a consultation with one of our specialists to receive a tailored service quote.

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The information in this article is provided for general informational purposes only and does not constitute legal or tax advice. This content does not establish an accountant-client or attorney-client relationship and should not be relied upon as a substitute for personalised advice from a qualified professional.