Dividend Taxation: what changes in 2026 and how to prepare

Bill 1,087/2025 proposes taxing dividends starting in 2026. Companies that act in 2025 can still distribute accumulated profits tax-free. Understand what's changing and how to prepare.

What Changes with PL 1,087/2025?

The bill proposes Income Tax on dividends received by individuals starting January 1, 2026. Under current rules, dividends from Brazilian companies are exempt from IR for individuals—a benefit in place since 1996. With the change, dividends will be taxed according to the following progressive table:

• Up to BRL 50,000/month: Exempt
• From BRL 50,000 to BRL 150,000/month: 10% on the excess above BRL 50,000
• Above BRL 150,000/month: BRL 10,000 + 15% on the excess above BRL 150,000

Important: Dividends below BRL 50,000/month remain exempt. This protects small and medium shareholders.

The Strategic Window of 2025

Companies that distribute accumulated profits until December 31, 2025, will still enjoy full exemption. This creates a unique opportunity for companies with significant accumulated profits.

Practical Impacts by Business Size

Small Businesses (up to BRL 600k/year)

Limited impact. Dividends remain exempt up to BRL 50,000/month (BRL 600,000/year). Most small businesses distribute less than this, so taxation will not apply.

Medium Businesses (BRL 600k to BRL 10MM/year)

Moderate to significant impact. Companies distributing BRL 100,000 to BRL 300,000/month will face tax of 10-15%. Strategic planning is essential: should they pay pro-labore or distribute dividends? Holding structures may become more attractive.

Large Businesses (above BRL 10MM/year)

High impact. Distributions exceeding BRL 150,000/month will be taxed at 15% (maximum rate). The difference between distributing BRL 10 million in 2025 vs. 2026 can be up to BRL 1.5 million in tax.

Accumulated Profits: The 2025 Urgency

Many companies have accumulated profits from previous years (distributed or not). If distributed by December 31, 2025, they remain exempt. If distributed from 2026 onward, they will be taxed.

How to Prepare?

Step 1: Map Accumulated Profits

Request from your accountant: Complete balance sheet as of 12/31/2024 with accumulated profits. List of profits by year. Legal and accounting availability for distribution.

Step 2: Evaluate Distribution Capacity

Can your company distribute these profits in 2025? Do you need cash for operations? Are there debts or obligations? Is there liquidity to make these payments?

Step 3: Consider Holding Structures

For business groups, creating a holding company in 2025 and distributing accumulated profits to it is a viable strategy to preserve exemption, allowing partners to receive dividends gradually in future years.

Step 4: Document Everything

All distribution decisions must be formally documented: Partners/shareholders meeting minutes, resolutions approving distributions, updated accounting records and balance sheets. This documentation is essential for defense against future tax audits.

Alternatives to Consider

1. Pro-Labore vs. Dividends

Pro-labore is already taxed (IR + INSS). With dividend taxation, the gap narrows. A comparative study may reveal that balanced pro-labore + dividends is more tax-efficient than dividends alone.

2. Profit Reinvestment

Instead of distributing, consider reinvesting in: Business expansion (new branches, products), tangible and intangible assets, reserve funds.

3. Holdings and Corporate Restructuring

Creating holdings or restructuring the corporate group may generate tax and succession advantages that offset or minimize dividend taxation.

Conclusion

Dividend taxation is a reality that will change the strategic decisions of Brazilian companies. Those who act in 2025 still have the opportunity to distribute accumulated profits tax-free. Those who wait will face a new reality with a higher tax burden. Time to act is now.