Lawmakers Move Forward on Brazil’s Plan to Raise Taxes for the Rich

Brazil is one step closer to a major change in who pays income tax. Lawmakers in the Chamber of Deputies have approved a government plan that raises the bar for tax-free income to 5,000 reais per month—about $1,000.

This means millions of workers will keep more of their wages, and the government estimates around 65% of all taxpayers won’t pay any income tax at all.

To offset lost revenue, the plan introduces a new rule: anyone earning over 600,000 reais each year (about $120,000) must pay at least 10% of their income in taxes.

Before this, wealthy Brazilians often paid much less than their share, especially when getting income from dividends, which had been tax-free.

Newly proposed rules would tax most dividends at 10% too, closing a major loophole used by business owners and investors. The government admits this shift could initially reduce public funds by nearly 26 billion reais per year, according to official Ministry of Finance projections.

Still, the new taxes on high incomes and dividends should balance the books. Lawmakers say these changes mostly affect the richest 0.1% of taxpayers, while lifting a heavy tax weight from regular workers.

This move marks a break from Brazil’s old system, long criticized for letting the wealthy contribute less, percentage-wise, than the poor.

The bill still needs full approval from Congress and the Senate before it becomes law. If passed, millions will see bigger paychecks, and Brazil’s tax system will take one step closer to fairness.