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A Brazilian worker faces a historic tax change that could boost their take home this Christmas. The article explains how the reform expands the income tax exemption for earnings up to five thousand reais, changing how the second installment of the thirteenth salary is taxed. The big change is a tax reduction system that can fully or partially exempt incomes up to seven thousand three hundred fifty reais. The first half of the thirteenth salary remains the gross amount with no deductions, while the second half closes the tax picture. If they have dependents or other deductions, the tax base falls more and the exemption grows. For higher wages, the old progressive table remains in effect, keeping the overall tax burden similar to before.
- Tax exemption now covers workers earning up to five thousand reais per month.
- The later part of the thirteenth salary gets the tax relief.
- The initial installment of the thirteenth salary is always the gross amount divided by two with no deductions.
- Dependents and other deductions lower the tax base and boost the exemption.
- For earnings above seven thousand three hundred fifty reais, the reduced rule does not apply and normal tax rates apply.
Brazil’s 2026 Tax Changes Expand IR Exemption, Reconfiguring 13th Salary Deductions
In 2026, Brazil introduced changes to the income tax system that broaden the exemption for workers earning up to R$5,000 per month. The reform directly affects the calculation of the second installment of the 13th salary, where most tax deductions occur. The first installment, due by November 30, remains a simple split of the gross amount into two equal parts with no deductions.
How the first and second installments are calculated
Officials say the first installment continues to be the gross value divided by two, with no tax withheld. The second installment, due by December 20, is where the tax calculation is finalized under the new rules. The reform introduces a tax reduction system that can grant full or partial exemption for incomes up to R$7,350.
Dependents and deductions impact the tax base
Experts note that if a worker has dependents or other deductions, the tax base can fall further, potentially expanding the exemption. This means more workers could see tax relief reflected in the second installment of the 13th salary.
Conclusion
This reform broadens the IRPF exemption to incomes up to R$5,000 per month, directly affecting the calculation of the second installment of the 13th salary. The first installment remains the gross amount divided by two with no deductions. The reform introduces a tax reduction system that can grant full or partial exemption for earnings up to R$7,350. Dependents and other deductions reduce the tax base and can expand the exemption, potentially increasing relief in the second installment. For earnings above R$7,350.01, the old progressive table continues to apply, preserving the overall tax burden similar to prior years. In essence, workers could see more tax relief at year-end, while higher earners remain under the traditional structure. Individuals should review their personal circumstances to anticipate the impact on their take-home pay this Christmas.
Frequently asked questions
How does the 2026 IRPF change affect the 13th salary calculation?
The second half will use the new tax rules. The first half stays the same: gross half, no deductions. If you earn up to 7,350, you get full or partial exemption on the second half. For salaries above 7,350.01, the tax follows the traditional progressive table up to 27.5%.
What are the new IRPF exemption thresholds for 2026?
Exemption now covers incomes up to 5,000 per month. The reduction system also allows full or partial exemption for incomes up to 7,350. If you earn above 7,350.01, the old progressive rules apply.
Do dependents affect the 13th salary tax calculation under the new law?
Yes. Dependents and other deductions lower the tax base, which can increase the exemption amount.
What happens to the first parcel of the 13th salary under the 2026 rules?
It is always the gross amount divided by two, with no deductions.
How are high earners handled under the new rules?
For salaries above 7,350.01, the reduction system does not apply; tax follows the traditional progressive table up to 27.5%.