Lula criticizes ‘privileged’ elite and advocates for new income tax exemption

In a national radio and TV broadcast, the Brazilian President addressed the new income tax exemption. Lula stated that the ‘Brazilian elite’ benefits from privileges, deeming it ‘shameful’ that the group ‘pays less income tax than the middle class and workers.’ He emphasized that the law expanding the income tax exemption for those earning up to R$ 5,000 monthly will tackle the ‘privileges of a small financial elite’ and contribute to advancing tax justice in Brazil. The increase in the tax exemption threshold was sanctioned by Lula on the 26th after unanimous approval from the Senate and Chamber of Deputies.
According to Lula, the expansion will be covered by ‘0.1% of the Brazilian population,’ who will contribute more taxes ‘to provide relief to families who work, struggle, and move this country.’ Apart from exempting those earning up to R$ 5,000 per month, the new law introduces a discount for taxpayers earning up to R$ 7,350 monthly. To offset the tax reductions, the text proposes a minimum tax for high-income individuals, establishing a progressive rate of up to 10% for those earning over R$ 600,000 annually. These rules will take effect in 2026, impacting the 2027 Income Tax declaration.
The increase in the income tax exemption threshold is a key campaign promise of Lula. His aides view the measure as an ‘asset’ for the 2026 elections, where the President is expected to seek a fourth term. In addition to the changes in Income Tax, the President also highlighted advances in other social programs, such as Bolsa Família. He referenced a government ad campaign by the Presidential Communications Office on the new income tax exemption threshold, named ‘A Fairer Brazil.’ ‘Our government stands alongside the Brazilian people, building a more prosperous, stronger, and, above all, fairer country,’ stated Lula.
The President mentioned that calculations from the Federal Revenue indicate that the Income Tax changes in 2026 are projected to inject R$ 28 billion into the country’s economy. ‘Beyond adjusting the income tax table, the new law addresses the root cause of inequality in Brazil: the so-called tax injustice,’ Lula emphasized. He stressed that the federal government is committed to combating the privileges of ‘a few to protect the rights and opportunities of many.’ ‘Imagine someone striving for decent housing, using public transport, working hard to buy a car, and paying 10 times more income tax than the billionaires in our country. This is unacceptable. Change was necessary. And we are making it happen,’ he added.