R$70 billion in two years: cuts will affect salary bonuses, adjustment of the minimum and super salaries

The mandatory spending cut package, released by the government between Wednesday and Thursday, totals R$70 billion — R$30 in 2025 and R$40 billion in 2026. To achieve this, a series of measures will be taken and affect the most diverse areas , with the objective of adapting expenses to public revenues, complying with the fiscal framework foreseen by the Treasury since 2023 and, thus, increasing market confidence.

Among the highlights, a ceiling for the readjustment of the minimum wage and the medium-term reduction of the salary bonus. The richest also contribute to the package, as among Haddad’s proposals is the end of exceptions that help circumvent rules to break the ceiling in public service and even a reform of military pensions. A ceiling will also be established to curb the growth of parliamentary amendments, as well as the imposition of limits on the release of tax benefits.

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Amid the announcement of the cuts package, another announcement that had been promised since the campaign: ending income tax for those earning up to R$5,000 per month. According to the government, this change will not have an impact on public accounts, as it will be offset by the introduction of an effective rate of 10% for those earning more than R$50,000 per month.

This change would only apply to salaries paid as a Legal Entity, since anyone who falls under the CLT already has a tax rate of 27.5% on their salary — in this case, nothing would change for these people.

Minimum wage

The real adjustment of the minimum wage, which has been applied since 2023, consists of the correction for the previous year’s inflation added to the GDP growth of two years before.

With the change, GDP growth becomes effective, but the real variation will be within the limits of the fiscal framework — 2.5% above the previous year’s inflation. Next year, the minimum increase will be 2.9% above inflation, but due to the limitation, the minimum will be R$1,515 in 2025, R$6 less than the current rule.

If GDP shrinks in the coming years, the minimum wage will rise at least 0.6% above inflation, equivalent to the floor of the fiscal framework’s spending variation.

Salary Payment

The benefit of up to R$2,640 will be paid to those earning up to 2 minimum wages and will need a proposed amendment to the Constitution to become effective. This is because the way this value is corrected will be changed, no longer following the minimum wage adjustment standards.

According to the package, the bonus will be adjusted for inflation in the coming years, and from 2035, according to government forecasts, it will be equivalent to one and a half salaries.

Parliamentary amendments and tax exemptions

To limit the growth of amendments, Congress will need to approve the changes through a complementary bill. It will include the restriction of amendments to non-mandatory expenses and the prohibition of the real growth of non-mandatory amendments. Furthermore, 50% of the amounts approved by the bench amendments must be allocated to the Unified Health System (SUS). Measures that should total R$79.9 billion in 2030.

Tax exemptions and benefits can only be created, increased or extended if there is no primary deficit from 2025 onwards. It is worth remembering that, last year, R$519 billion were given in tax incentives in the country.

Military supersalaries and pensions

Expected to be voted on by bill, the end of exceptions for those who receive more than the ceiling. The measure will apply to all powers at federal, state and municipal levels.

For the military, the proposal must put an end to the so-called “fictitious death” — which is when the family of a soldier expelled from the Armed Forces receives a pension as if he had died. In addition to the end of pension transfers to dependents in the event of death and the progression of the minimum age for paid reserve to 55 years. Measures that should add up to savings of R$2 billion per year.

BPC, Bolsa Família and fine-tooth comb

The use of biometrics and facial recognition are among the measures to tighten the rules for those who receive the Continuous Payment Benefit (BPC) and Bolsa Família.

In the case of BPC, annual proof of life and identification mechanisms will be required. Disabled people will be the focus of the benefit and the income of other family members in the house will count towards access. In addition, anyone whose registration is out of date for more than 24 months without any reason for illness needs to update it.

In Bolsa Família, the government’s focus will be on combating irregularities, especially for those who live alone, single-person individuals. Thus, there will be restrictions for municipalities with a percentage of families with one person above that set out in the regulations; in addition to mandatory registration or updating at home; mandatory update for records that are 24 months out of date and other control measures, such as biometrics and data crossing, with public service concessionaires.

PEC Alternative

Amid the announcement of the spending cut package, Congress reacted. A movement to collect signatures is being carried out in the Legislature to create the Structural Fiscal Balance Program within the scope of the Union. According to federal deputies Pedro Paulo (PSD-RJ), Kim Kataguiri (União-SP) and Julio Lopes (PP-RJ ) — who are leading the collection of signatures — the proposal could save R$1.1 trillion in 10 years.

The proposal suggests separating social security and assistance benefits from the minimum wage, in addition to decoupling mandatory expenses from revenue collection, establishing a new, more adaptable and sustainable budgetary framework. This would not cut spending directly, but would moderate the growth of public spending.

Measures such as the decoupling of the constitutional floors for health, education and Fundeb could save R$74 billion between 2026 and 2028. According to parliamentarians’ accounts, the review of the salary bonus — to be paid by those who earn only one and not two minimum wages — could generate savings of R$15 billion annually by 2031.

To begin processing, the proposal needs at least 171 signatures from the 513 deputies.