The regressive table for fixed income

Most fixed-income investments in Brazil are taxed on a regressive (decreasing) schedule tied to how long you held the money. The longer you stay invested, the lower the rate — a deliberate incentive for long-term saving. The brackets below are the ones in force at the time of writing; confirm they have not changed before relying on them.

The brackets (verify before use)

The IR rate on the earnings (not the principal) of most fixed income, applied at redemption:

Up to 180 days        →  22.5%
From 181 to 360 days  →  20.0%
From 361 to 720 days  →  17.5%
Above 720 days        →  15.0%

The tax is withheld at source by the institution and is exclusive/definitive — you receive the net amount and only report it for the record on the annual declaration.

A worked example

Suppose you invest R$10,000 in a CDB and redeem after 800 days with R$2,000 of earnings:

Holding period   = 800 days  → 15% bracket
Taxable earnings  = R$2,000
IR withheld       = 2,000 × 0.15 = R$300
You receive       = principal + 2,000 − 300 = R$11,700

Had you redeemed at day 100 instead, the same R$2,000 would be taxed at 22.5% = R$450 — R$150 more, just for the timing.

The IOF trap on very short holdings

For redemptions in the first 30 days, a separate tax, IOF, also bites on a sliding scale that starts near 96% on day one and reaches zero at day 30. IOF is charged before the IR. The practical lesson: avoid redeeming fixed income within the first month unless you truly must.

Important exceptions

Several products are exempt from this table (LCI, LCA, CRI, CRA, poupança, and some debentures — verify current status, as exemptions are periodically reviewed by Congress). Those are covered in the fixed-income lesson of the next chapter. As always: educational only — check the rules in effect and your accountant before acting.