Lula Proposes MEI Tax-Free Revenue Limit Hike to BRL 140k

President Luiz Inácio Lula da Silva delivered a bill to Congress on June 29, 2026, to raise the annual revenue limit for Microentrepreneurs (MEIs) from BRL 81,000 to BRL 140,000 by 2028. Under the proposed legislation, the transition will occur in stages, with the tax-free ceiling rising to BRL 110,000 in 2027 before reaching the BRL 140,000 target. The bill also increases the employee hiring limit for MEIs from one to two.

While the government aims to boost micro-entrepreneur credit, foster formalization, and cushion the transition from the controversial 6x1 workweek reduction PEC, the expansion has triggered market concerns. Financial analysts warn that the broader tax exemptions could lead to a drop in federal revenues. The initial proposal to raise the limit to BRL 130,000 immediately carried an estimated fiscal impact of BRL 2 billion, prompting the economic team to structure a gradual phase-in to protect public accounts.

The primary risk for investors lies in congressional pressure to expand these adjustments. Lawmakers are already pushing to simultaneously update the brackets for the broader Simples Nacional tax regime, with proposals to raise its limit from BRL 4.8 million to BRL 8 million. The government's economic team strongly resists altering the Simples Nacional brackets due to the risk of wider fiscal slippage. Any significant compromise could pressure Brazilian financial assets, including the Bovespa index (IBOV), the Brazilian Real (USD/BRL), and long-term interest rate futures (DI1F33).