Single Income Tax of 17.5% for Investments: what changes and who gains (or loses) with the new Provisional Measure

1. Introduction

Provisional Measure No. 1,303/2025, part of the Federal Government's fiscal package, proposes a change in the taxation regime for financial investments by establishing a single rate of 17.5% on income from fixed income investments, investment funds, stocks, and crypto assets, with an expected effective date of 2026.

This is a significant change in the income tax system applicable to financial gains, currently regulated by regressive tables, which vary according to the investment term, favoring long-term investments. The proposal, therefore, raises questions regarding tax equality, the principle of contributory capacity, and the economic and legal effects resulting from the standardization of tax rates.

2. The current model and the unification proposal

Currently, income from financial investments follows the rules set forth in Law No. 11,033/2004, Decree No. 9,580/2018 (Income Tax Regulations), and the complementary rules of the Brazilian Federal Revenue Service, which deal with both fixed-income and variable-income investments.

Under the current regime, fixed income investments are taxed according to a regressive table, which varies according to the term of the investment:

• 22.5% for redemptions up to 180 days;

• 20% for terms of 181 to 360 days;

• 17.5% for terms of 361 to 720 days;

• 15% for terms longer than 720 days.

This logic seeks to encourage long-term investment, while imposing higher taxation on short-term and speculative transactions.

With regard to variable income, net gains earned on stock transactions are currently taxed in accordance with the regime provided for in Law No. 8,981/1995, Article 2 of RFB Normative Instruction No. 1,585/2015, and Article 2 of Law No. 11,033/2004, with the following rules:

• 15% on net gains on ordinary transactions;

• 20% on net gains on day trading transactions;

• exemption for sales of up to R$ 20,000.00 per month in spot market transactions.

MP 1.303/25, however, extinguishes the temporal progressivity and proposes a single rate of 17.5%, applicable to most financial transactions, including investment funds, stocks, and crypto assets, preserving only a few specific exemptions — such as LCI, LCA, CRI, CRA, and incentive debentures.

The text also provides for the replacement of the monthly exemption of R$ 20,000.00 with a quarterly exemption of R$ 60,000.00 for disposals in variable income, and an increase in the rate levied on Interest on Equity (JCP) from 15% to 20%.

The unification of rates, therefore, although simplifying the calculation mechanism, eliminates the extra-fiscal nature of taxation on investments, discouraging the extension of investment terms and long-term capitalization.

3. Government rationale and justification

According to the Explanatory Memorandum accompanying the MP, the proposal aims to:

“Simplify taxation, reduce distortions between investment modalities, and increase the fiscal neutrality of the system, ensuring greater predictability and equity in the tax burden.”

In other words, the stated objective would be to eliminate the tax asymmetry between fixed and variable income assets, standardizing tax treatment. However, when analyzing the issue from a legal and tax perspective, it is clear that neutrality is not necessarily synonymous with tax fairness.

4. The legal perspective: neutrality vs. contributory capacity

The principle of contributory capacity, provided for in Article 145, §1, of the Federal Constitution, requires that taxes be graded according to the taxpayer's economic potential.

The application of a single tax rate, in turn, ignores the diversity of economic situations underlying each type of investment, which can lead to an indirect violation of tax equality (Article 150, II, CF).

In doctrine, Ricardo Lobo Torres (in Course de Direito Financeiro e de Direito Tributário [Course on Financial Law and Tax Law], 2013) points out that tax justice is achieved “when the tax takes into account the circumstances and nature of the taxable event, and not just the formal equality of the taxpayer before the law.” Thus, standardization without considering the economic profile of each transaction can generate material inequality among investors.

In addition, the unification of the tax rate tends to discourage long-term productive investment, contrary to economic guidelines for promoting private financing of structural projects, especially those related to capital markets and infrastructure.

5. Practical effects on different applications

5.1 Fixed income and Treasury Direct

With the end of the regressive table, the time incentive is eliminated, which directly impacts products such as CDBs and Treasury Direct, traditionally associated with long-term savings goals. All pay 17.5%, regardless of the term.

5.2 Investment funds

Investment funds maintain the come-quota mechanism, which anticipates the payment of tax every six months without waiting for redemption.

5.3 Shares and Interest on Equity

The unification also affects the stock market. The proposal unifies taxation on stock gains (including day trading) at 17.5% and raises the income tax withheld on interest on equity capital (JCP) from 15% to 20%. The monthly exemption of R$ 20,000 would also be replaced by a quarterly exemption of R$ 60,000.

5.4 Cryptocurrencies

The MP includes virtual assets in the tax base, taxing gains at 17.5% without a monthly exemption. However, the text creates a window of regularization for those who have not yet declared their digital assets, with a reduced rate of 7.5% until the end of 2025.

5.5 Real Estate Investment Funds (FIIs) and Fiagros

They maintain the dividend exemption, provided they meet the diversification requirements, and now have a 17.5% income tax on the sale of shares, replacing the current 20% rate.

5.6 LCI, LCA, CRI, CRA, and Incentivized Debentures

Remain exempt after strong market resistance. The government backed down from its attempt to tax these securities.

6. Final provisions

The creation of a single tax rate for income from financial investments, as proposed by MP No. 1,303/25, represents a clear move toward simplifying and standardizing the tax system. However, this simplification has significant side effects, especially when analyzed from the perspective of the package of proposed and effective changes in taxation, in addition to the logic of the extra-fiscal function of taxes, i.e., to encourage and discourage certain behaviors.

It is worth remembering that the regressive table applied to fixed income, for example, was created with the aim of discouraging very short-term speculative transactions and encouraging long-term investment, thereby promoting savings and capitalization.

Removing this progressivity, therefore, tends to reduce the incentive differential between investment terms, approaching a logic of tax neutrality, which, on the other hand, weakens the developmentalist character of this fiscal policy.

In this logic, thinking in the long term, it may end up resulting in a reduction in long-term savings and greater volatility in investments (through short-term and/or speculative operations), given the loss of incentives to remain.

In this scenario, it would be essential to have a complementary policy focused on education and encouraging long-term savings and capitalization, both as a tool for asset growth and for individual financial planning.

The standardization of tax rates may also impact tax collection, requiring the State to calibrate, especially extra-fiscal incentives, such as incentive debentures and infrastructure funds, to offset any tax collection imbalances and preserve the direction of productive investments.

In summary, the approval of MP 1.303/25 inaugurates a new cycle of tax adaptation, which requires planning and political care.