Lula sanciona ampliação de isenção do IR para até R$ 2.824 mensais

President Luiz Inácio Lula da Silva signed into law on Wednesday an expansion of Brazil's income tax exemption, raising the threshold to R$2,824 per month—equivalent to two minimum wages. The legislation had cleared Congress in mid-April and was waiting for presidential approval. The signing ceremony took place at the Neoquímica Arena in São Paulo's East Zone, during a Labor Day event with union leaders, though Lula noted the turnout disappointed him at the Corinthians stadium where he is a supporter.

The new threshold represents a significant jump from where it had been frozen for nearly a decade. Since 2015, workers earning up to R$1,903.98 monthly paid no income tax. That figure rose to R$2,640 in 2023 after accounting for automatic payroll deductions of just over R$500. Now it climbs to R$2,824, with the same automatic deduction factored in. For millions of lower-income Brazilians, this means keeping more of their paychecks.

Lula used the occasion to reaffirm a central promise from his 2022 campaign: that by the end of his term, no one earning up to R$5,000 monthly would owe income tax. "The Brazilian economy has started growing again, salaries have started growing again," he said. "I promised you that by the end of my mandate, people earning up to R$5,000 will not pay income tax. That promise still stands." The statement signals his administration's intention to continue raising the exemption threshold in coming years, though the path to that R$5,000 goal remains unclear.

Beyond the tax measure itself, Lula attempted to ease tensions between his government and Congress, which have simmered in recent months. He pushed back against media coverage suggesting open warfare between the executive and legislative branches, noting instead that his progressive caucus is a minority in the Chamber of Deputies and that governing requires building coalitions. "I want to acknowledge this: we made political alliances to govern, and to this day every project we sent to Congress was approved according to the government's interests," he said. "That happened because of the competence of ministers and deputies who learned to talk to each other instead of hating each other."

Lula also highlighted recent economic developments to bolster his case that his administration is delivering results. He pointed to R$129 billion in announced automotive industry investments—something he said had not occurred in over forty years—and to Acredita, a new credit program for small and medium-sized entrepreneurs that he called the largest credit initiative the country has ever seen. Vice President Geraldo Alckmin and several cabinet ministers attended the ceremony, along with federal deputy Guilherme Boulos, a pre-candidate for São Paulo's mayoral race. Notably absent were São Paulo Governor Tarcísio de Freitas and Mayor Ricardo Nunes, both of whom were invited but did not attend; Nunes cited prior commitments.

The income tax expansion, while modest in scope, carries symbolic weight in a country where wage stagnation and inflation have squeezed working families for years. For those earning two minimum wages, the change means relief. For Lula, it is both a tangible delivery on campaign promises and a test of whether his government can sustain the political momentum needed to reach the R$5,000 threshold before his term ends.