Yesterday (November 26), Bill 1,087/2025 (“PL No. 1,087/2025”) was signed into law by the President of Brazil, resulting in the enactment of Law No. 15,270/2025. The new law increases the income tax exemption range (up to R$ 5,000.00 per month) and establishes a minimum income tax percentage on taxpayers’ income, including dividends (referred to as high income taxation).

• Minimum Annual Income Tax

The proposal establishes, as a general rule starting in January 2026, a 10% withholding tax on dividends exceeding R$ 50,000.00 paid by a legal entity to the same individual in a single month. The amount withheld at source is treated as an advance payment of the minimum annual tax calculation.

Starting in 2026, there will be a minimum income tax for individuals with annual incomes above R$ 600,000.00.
The minimum tax rate will be progressive (0% to 10%) for incomes between R$ 600,000 and R$ 1.2 million, and 10% for incomes above R$ 1.2 million.

Most income is considered in the calculation of the minimum tax, with exceptions such as donations in advance of the legitimate portion of an inheritance, inheritance, exempt portion of rural activity, and income from financial investments that are exempt or subject to a zero tax rate. The mechanism requires a supplementary payment in the annual tax return if the tax paid is below the minimum threshold.
There is a reduction mechanism to prevent the total effective tax burden (Legal Entity + Individual) from exceeding the nominal IRPJ and CSLL rates for Legal Entities (normally 34%).
It is important to note that profits and dividends calculated up to 2025 (the “stock”) will not be taxed, provided that the requirements are met (including approval in 2025).

• Profits and Dividends Paid Abroad

Profits and dividends paid to beneficiaries abroad (individuals or legal entities) will be subject to Withholding Income Tax (IRRF) at a fixed rate of 10%. There is provision for a credit calculation similar to the reduction for residents, allowing the appropriation of a credit within 360 days, in a procedure to be detailed in regulations.

The sanction confirms that the changes in taxation will take effect in January 2026. Taxpayers who take the measures provided for by the law itself for distribution in 2025 can minimize the impact of the new rules.

Finally, the taxation of dividends makes it even more necessary to reassess the form of remuneration for partners and shareholders. Mechanisms such as the payment of Interest on Equity Capital (“JCP”) can help bring tax efficiency.

The Tax Team at FLH Advogados is available to answer any questions on the subject.