Payroll Tax Relief Phase-Out: what changes in 2026 and how to prepare

Brazil's payroll tax relief program is being phased out gradually through 2028 — and 2026 is the year the cash-flow impact starts to bite

Since 2025, companies benefiting from Brazil's payroll tax relief program (desoneração da folha) have been feeling the effects of Law No. 14,973/2024, which established a gradual phase-out of the benefit. In 2026, this transition moves into a more advanced stage — and the budget impact becomes significant.

How the transition works

Until 2024, companies eligible for the tax relief paid only the Social Security Contribution on Gross Revenue (CPRB), at rates between 1% and 4.5%, and were exempt from the standard 20% employer social security contribution on payroll. Under the gradual phase-out, this became a hybrid model: contributions now apply simultaneously to both gross revenue and payroll, at increasing rates each year.

In 2025, the CPRB rate ranged from 3.6% to 0.8% (a 20% reduction from the previous model), and companies also began paying an additional 5% on payroll. In 2026, the CPRB rate drops further to a range of 2.7% to 0.6%, while the payroll-based rate rises to 10% — doubling that component's weight compared to the prior year. The transition continues through 2028, when the tax relief program ends entirely and companies return fully to the standard 20% payroll contribution.

A deadline HR and finance can't afford to miss

The election to opt into the tax relief regime is made when paying the January social security contribution, due by February 20 — and this choice locks in for the entire calendar year, with no option to change it later. Missing this deadline, or deciding without running the numbers, can compromise financial planning for the following 12 months.

Why this requires HR and finance to work together

The rising payroll-based rate directly increases labor costs, putting pressure on budgets at labor-intensive companies — particularly in services, technology, and call center operations, historically the biggest beneficiaries of the tax relief program. With enforcement increasingly integrated across eSocial, FGTS Digital, and DCTFWeb, any calculation error during this transition period becomes far easier for tax authorities to detect.

What to do now

• Model the different rate scenarios before deciding whether to opt into the regime for 2026

• Revisit tax and financial planning in light of the new payroll-based cost

• Reassess hiring policies and benefits packages given the rise in employer contributions

• Rely on specialized support to ensure transition-period calculations are error-free

Conclusion

The gradual phase-out isn't a one-time adjustment — it's a structural shift that requires careful modeling and early decision-making. Companies that treat 2026 as "just another transition year" risk being caught off guard by a cash-flow impact that has, in fact, been predictable since 2024.

DBS Partner closely tracks these regulatory changes and helps companies calculate payroll accurately throughout the tax relief phase-out period. Get in touch with our team and plan ahead with confidence. Prefer to reach us directly? Email us at dbs@dbspartner.com.br.

Source: Contábeis, Omie, and Wiipo | Adaptation and review: DBS Partner Team