Brazil's Proposed Income Tax Exemption Could Impact State Revenue

A proposed bill by the Brazilian federal government suggests exempting income tax withheld at source (IRPF) for salaries up to R$ 5,000. If approved, this could significantly impact the revenue collection of municipalities and states across the country. Government officials are viewing this measure with concern. In Porto Alegre, the adjustment to the tax table established by Federal Bill No. 1087/25, which also considers reducing rates for incomes up to R$ 7,000, is estimated to result in annual losses of R$ 37.7 million.