On October 1, 2025, the Chamber of Deputies approved Bill No. 1,087/2025, which, in addition to increasing the income tax exemption threshold to BRL 5,000.00, also introduced a minimum tax on so-called “high incomes” and established taxation on profits and dividends.
The approved text will now proceed to the Senate, which may propose adjustments — particularly regarding the taxation of retained earnings.

1. TAXATION OF PROFITS AND DIVIDENDS
The bill proposes a 10% Withholding Income Tax (IRRF) on profits and dividends distributed by a company to the same individual, on amounts exceeding BRL 50,000 per month, regardless of the number of payments made, starting from January 1, 2026.

The approved bill includes transitional rules for income tax incidence on profits and dividends earned up to the 2025 tax year:
It excludes from taxation profits and dividends related to results earned up to the 2025 calendar year, provided that their distribution is approved by December 31, 2025, and payments are made according to the terms originally approved, even if in 2026, 2027, or 2028.

In other words, the PL establishes taxation on results earned up to December 31, 2025, but creates an exception: profits and dividends accumulated up to 2025 and properly approved in meetings or assemblies by December 31, 2025, will not be subject to the new 10% tax.
For tax purposes, such approval must comply with all corporate formalities required by the Brazilian Corporation Law or Civil Code, depending on the company’s legal structure.

The bill also establishes a 10% IRRF on profits or dividends remitted abroad, applicable to any amount and including those sent to legal entities, starting in January 2026.

Among the 47 OECD member countries, Brazil is currently one of only three that do not tax profits and dividends. Should the bill be definitively approved, this scenario will change.

The year 2025 marks a critical point for Brazilian companies and investors, as the bill sets specific deadlines that require immediate attention — particularly regarding accumulated profits and corporate resolutions.
Companies with retained earnings or 2025 results should consider anticipating corporate decisions to secure the current tax exemption.

As previously noted, the approved text may lead to potential legal disputes, since corporate results are usually submitted for approval up to the fourth month after the fiscal year’s end — which may conflict with the bill’s provisions.

Companies must also review their corporate, family, and holding structures, especially those that accumulate profits for later distribution.
In this scenario, business groups with complex structures should begin a preliminary diagnostic to identify restructuring opportunities before the new law takes effect.

2. TAXATION OF HIGH INCOME
The bill also introduces an Individual Income Tax (IRPF) on high-income individuals starting in 2027 (2026 tax year), applicable to those whose annual income exceeds BRL 600,000.

Excluded from this calculation are earnings from LCI, LCA, CRI, and CRA, as well as capital gains (except those from stock market operations), inheritance advances, exempt income, lump-sum payments taxed at source, and savings account income.

The Dupont Spiller Fadanelli Advogados team continues to monitor this issue and is available to clarify any questions.