Law 15,270/2025 and the new Brazilian minimum income taxation

Law 15,270/2025 reorganized the taxation of individual income in three articulated movements, effective as of 2026. It broadened the monthly exemption band, created a withholding tax on large dividend payments and introduced the minimum income tax on high incomes, structurally changing the equation of profit distribution in Brazil.

The broadened exemption

Monthly taxable income of up to five thousand reais becomes relieved through a reducer applied to the assessed tax, with a partial and decreasing discount for income of up to seven thousand three hundred and fifty reais, under art. 16-A of Law 9,250/1995, as amended by the new statute.

The dividend withholding and the minimum tax

Profits and dividends paid by the same legal entity to the same individual in an amount exceeding fifty thousand reais in a month become subject to withholding income tax at the rate of ten percent, levied on the full amount without any deduction.

In a complementary manner, the statute created the minimum income tax applicable to individuals whose annual income exceeds six hundred thousand reais, with a rate growing linearly up to ten percent for annual income of one million two hundred thousand reais or more. The base takes into account income generally, including exempt income, with specific statutory exclusions, and the tax due is assessed with deductions and credits designed to avoid double taxation of the same profit. Among the calibration mechanisms, the statute provides a reducer intended to prevent the combined burden of the legal entity and of the individual on distributed profit from exceeding the sum of the nominal corporate income tax and social contribution rates.

The transition rule

The withholding and the minimum tax do not reach profits determined up to fiscal year 2025 whose distribution has been approved by the competent corporate bodies by 31 December 2025, even if payment occurs in later years, subject to the terms and conditions set by the statute itself. The rule lends immediate relevance to the formalization of corporate resolutions, with registered minutes and defined payment criteria.

Recommended measures

Companies and shareholders should review distribution policies, evaluate the timely resolution on accumulated profits, reexamine partner compensation structures and project, case by case, the combined effect of the monthly withholding and the annual assessment of the minimum tax. Corporate reorganizations motivated solely by the new statute should be examined with caution, in light of the business consistency required by administrative case law.

This article is for general information only and does not constitute legal advice. For guidance on specific situations, please contact our team at contato@gotlibrocha.com.br.