Enactment of Law No. 15,270/2025, Which Establishes Dividend Taxation, Expands the Exemption Threshold, and Introduces a Minimum Tax on High Incomes

On November 26, 2025, Bill No. 1,087/2025 (“Bill No. 1,087”) was enacted and converted into Law No. 15,270/2025, which introduces a series of relevant changes to income taxation, including:

• expansion of the exemption threshold for Individual Income Tax (“IRPF”),
• creation of a minimum tax on high incomes (“IRPFM”), and
• imposition of withholding income tax (“IRF”) on profits and dividends in the cases specified.

I. LEGISLATIVE PROCEDURE

The enacted text preserved the substance of the version of Bill No. 1,087 unanimously approved by the House of Representatives in October. During the bill’s review in the Senate, only wording-adjustment amendments were approved, with no significant changes to the text originally approved by the House.

To avoid sending the bill back to the House—thus preventing delays in the implementation of the new rules—Senators agreed that substantive amendments would instead be analyzed within Bill No. 5,473/2025 (which primarily addresses the taxation of betting platforms and fintechs), still pending Senate review.

II. IRPF

Law No. 15,270/2025 amends Laws No. 9,250/1995 and 9,249/1995 to implement a new set of IRPF rules, aimed at reducing the tax burden on lower-income taxpayers by introducing:

• an exemption for monthly income of up to R$ 5,000;
• progressive reductions for monthly income of up to R$ 7,350;
• an exemption for annual income of up to R$ 60,000; and
• progressive reductions for annual income of up to R$ 88,200.

III. IRPFM – ANNUAL MINIMUM TAXATION

Another relevant change introduced by Law No. 15,270/2025 relates to the new minimum taxation regime applicable as of 2026 to resident individuals whose annual tax base exceeds R$ 600,000.

The IRPFM annual tax base is broad, encompassing all income earned by the taxpayer in Brazil and abroad, including income that is exempt or subject to exclusive withholding tax, except for specific items expressly listed in the Law, including:

• capital gains, except those arising from exchange-traded or organized over-the-counter operations taxable based on net gains in Brazil;
• accumulated income taxed exclusively at source, provided the taxpayer has not opted for the annual adjustment under §5 of Article 12-A of Law No. 7,713/1988;
• amounts received as advance inheritance or donations;
• income from savings accounts and remuneration from certain securities (Mortgage Notes, LCI, CRI, LIG, LCD, and other instruments related to infrastructure investment projects under Law No. 12,431/2011, as well as investment funds meeting specific requirements);
• income distributed by Real Estate Funds (FII) and Fiagro funds whose units are traded exclusively on stock exchanges or organized over-the-counter markets and that have at least 100 quota holders;
• remuneration from instruments such as CDA, WA, CDCA, LCA, CRA, and CPR (if traded in the financial market);
• the IRPF-exempt portion related to rural activity;
• indemnities for workplace accidents and for material, bodily, or moral damages, except for lost profits;
• exempt income already provided under Article 6, XIV and XXI, of Law No. 7,713/1988;
• profits and dividends:
  • relating to results calculated up to the 2025 calendar year,
  • whose distribution has been approved by December 31, 2025 by the competent corporate body, and
  • provided that payment, credit, assignment, or delivery occurs between 2026 and 2028 pursuant to the approval granted by December 31, 2025;
• income from securities exempt or subject to a zero rate, except for income from shares and other equity interests.

Under the annual IRPFM regime, tax bases between R$ 600,000 and R$ 1,200,000 are subject to progressive rates ranging from 0% to 10%, while tax bases above R$ 1,200,000 are subject to a flat 10% rate.

The following deductions are allowed from the IRPFM amount:

• IR due in the annual tax return;
• IRF withheld exclusively at source on income included in the IRPFM tax base;
• tax on income earned from financial investments, controlled entities, and trusts abroad;
• tax definitively paid on income included in the IRPFM base and not covered in previous items; and
• reduction of the minimum tax resulting from the verification of the combined effective tax burden borne by the legal entity and the individual on the same profit.
  This reduction applies when the sum of the effective IRPJ/CSLL rate on the entity’s accounting profit, and the effective IRPFM rate, exceeds the following thresholds:¹
  • 34% for legal entities in general;
  • 40% for insurance companies and capitalization companies, as well as certain financial institutions listed in items II, III, IV, V, VI, VII, IX and X of §1 of Article 1 of Complementary Law No. 105/2001; and
  • 45% for banks of any kind, as referred to in item I of §1 of Article 1 of Complementary Law No. 105/2001.

IV. IRPFM – MONTHLY WITHHOLDING

As of January 2026, payment, credit, assignment, or delivery of profits and dividends by the same legal entity to the same resident individual in an amount exceeding R$ 50,000 within the same month will be subject to 10% withholding IRPF, without any deductions.

The IRF withheld under this rule will be considered an advance payment toward the amount due in the annual tax return and must be included in the IRPFM calculation as described above.

Examples of IRPFM calculation

a) With withholding tax on monthly dividends exceeding R$ 50,000 paid by the same legal entity to the beneficiary

Step 1: Determination of the IRPFM tax base (*assuming withholding tax was applied to dividends*)

Step 2: Identification of the IRPF on total annual income composing the IRPFM base

Step 3: Calculation of IRPFM (*assuming withholding tax was applied to dividends*)

b) Without withholding tax on monthly dividends exceeding R$ 50,000 paid by the same legal entity to the beneficiary

Step 1: Determination of the IRPFM tax base (*assuming no withholding tax was applied to dividends*)

Step 2: Identification of the IRPF on total annual income composing the IRPFM base

Step 3: Calculation of IRPFM (*assuming no withholding tax was applied to dividends*)

V. WITHHOLDING TAX ON PROFITS AND DIVIDENDS – NON-RESIDENT INVESTORS

As of January 2026, profits or dividends paid, credited, delivered, assigned, or remitted (“distributed”) abroad will be subject to 10% withholding income tax (IRF), regardless of the amount, the nature of the income, or the residence or domicile of the beneficiary.

It is worth noting that the non-resident investor may be entitled to a credit similar to the deduction described in item III.(iv) above, depending on the total effective tax burden verified.

Profits and dividends distributed to the following beneficiaries remain exempt:

• foreign governments, provided there is reciprocal treatment regarding income earned in their territories by the Brazilian government;
• sovereign wealth funds, as defined in §5 of Article 3 of Law No. 11,312/2006; and
• foreign entities whose primary activity is the administration of pension and retirement benefits, as defined in regulation.

VI. TRANSITION RULES – RESULTS CALCULATED UP TO DECEMBER 31, 2025

In summary, Law No. 15,270/2025 establishes three interrelated transition rules, as follows:

(i) IRPFM – Monthly Withholding:

As indicated above, beginning January 2026, profits and dividends distributed in excess of R$ 50,000 per month, by the same legal entity to the same individual resident in Brazil, will be subject to 10% IRF withholding.

However, withholding will not apply when such profits or dividends relate to results calculated up to the 2025 calendar year, provided that:

• the distribution has been approved by December 31, 2025,
• the amounts are enforceable under civil or corporate law, and
• the distribution occurs under the terms originally established in the corporate resolution.

There is no specific deadline for the actual payment, meaning that compliance with the schedule defined in the corporate approval should suffice.

(ii) IRPFM – Annual Taxation:

Beginning in 2026, profits and dividends will be included in the tax base of the individual’s minimum tax (IRPFM). Among the deductions allowed are profits and dividends:

• relating to results calculated up to the 2025 calendar year,
• whose distribution has been approved by December 31, 2025, and
• whose payment, credit, assignment, or delivery occurs in the 2026, 2027, or 2028 calendar years, consistent with the corporate approval issued by December 31, 2025.

Unlike the rule applicable to monthly withholding, the deduction from the annual IRPFM tax base is only allowed if distribution occurs by 2028.

(iii) Non-Resident Investors:

Similar to the rule applicable to monthly IRPFM withholding, Law No. 15,270/2025 provides that IRF withholding will not apply to profits and dividends relating to results calculated up to the 2025 calendar year, provided that:

• the distribution has been approved by December 31, 2025,
• the amounts are enforceable under civil or corporate law, and
• distribution follows the terms established in the 2025 corporate approval.

Differently from the annual IRPFM rule, here there is also no deadline for the distribution to occur, suggesting that compliance with the schedule established in the 2025 corporate resolution should be sufficient.

This asymmetry among transition rules may lead to inconsistent interpretations and practical implementation challenges.

VII. OTHER AMENDMENTS INTRODUCED BY LAW NO. 15,270/2025

Law No. 15,270/2025 also amends Article 10 of Law No. 9,250/1995 to update the ceiling for the 20% simplified deduction on taxable income (at the taxpayer’s option in the annual tax return), increasing the limit to R$ 17,640.00 as of 2026.

Finally, Law No. 15,270/2025 creates a compensation mechanism designed to preserve the federative balance, ensuring that any revenue losses incurred by States, the Federal District, and Municipalities are offset by increased revenues from:

• withholding tax on dividends distributed to non-resident beneficiaries, and
• the IRPFM.

If the increased revenues are insufficient to ensure compensation, the federal government will perform quarterly transfers. Part of the incremental revenue will be allocated to states and municipalities, with any remaining balance contributing to fiscal neutrality for purposes of calculating the CBS reference rate.

The Tax practice of Tauil & Chequer Advogados associated with Mayer Brown is available to provide additional clarifications on this matter.

¹ Companies that are not subject to the actual profit taxation regime may opt for a simplified calculation of accounting profit, which will correspond to the gross revenue amount minus specific deductible expense items.