President Luiz Inácio Lula da Silva (PT) delivered a bill to raise the annual revenue ceiling for Micro-entrepreneur Individual (MEI) status on May 29, 2026 [4].
The proposal seeks to formalize more small businesses and expand access to tax benefits for entrepreneurs facing inflation and growth pressures. By increasing the turnover limit, the government aims to simplify the formalization process for a larger segment of the workforce.
Lula delivered the proposal to the President of the Chamber of Deputies, Hugo Motta (Republicanos-PB). The bill proposes increasing the current annual revenue ceiling of R$ 81,000 [1] to a new limit of R$ 120,000 [2]. The government intends to reach this R$ 120,000 threshold by the year 2028 [3].
In addition to the revenue increase, the bill proposes allowing MEIs to increase their quantity of hiring [1]. This change would allow small business owners to scale their operations without immediately losing the simplified tax regime associated with the MEI classification.
The move follows pressure from Congress and concerns regarding how inflation has eroded the purchasing power and revenue ceilings of small entrepreneurs [1]. The current system often forces businesses to transition to more complex and expensive tax categories as soon as they exceed the R$ 81,000 [1] limit.
By lifting the cap, the administration intends to prevent a "growth trap" where entrepreneurs avoid expanding their business to keep their tax-advantaged status. The proposal represents a shift toward a more flexible regulatory environment for the smallest business entities in Brazil.
“The bill proposes increasing the current annual revenue ceiling of R$ 81,000 to a new limit of R$ 120,000.”
This legislative push indicates a strategic effort by the Lula administration to sustain the growth of the informal sector by easing the transition into formal business categories. By adjusting the revenue ceiling to account for inflation and growth, Brazil aims to reduce the number of businesses operating outside legal frameworks while increasing the overall tax base through a simplified, low-barrier entry system.
