Brazil's Congress raises MEI cap to R$140,000 and forgives debts; bill goes to the president

On Thursday (Oct. 15), Brazil's Senate voted 78–0 to approve Supplementary Bill (PLP) 186/2026, which raises the annual revenue limit for individual microentrepreneurs (MEIs) from R$81,000 to R$110,000 in 2027 and to R$140,000 from 2028 on. The bill, sent by the executive branch in June, had cleared the Chamber of Deputies the day before by 461 votes to 4 and now goes to President Luiz Inácio Lula da Silva for signature. Besides the new cap, the bill allows MEIs to hire up to two employees and forgives the category's debts with the federal government.

The MEI is a simplified regime in which the business owner pays a fixed monthly amount of taxes and contributions, with a company tax ID (CNPJ) and fewer obligations. The R$81,000 limit has been in place since 2018. In its justification sent to Congress, the government says inflation measured by the IPCA index has added up to 55.4% since then and that the new cap restores the purchasing power of the original amount, rather than representing a real expansion of the regime. Data from the National Department of Business Registration and Integration (DREI) cited in the same document show that 101,216 MEIs were moved to Simples Nacional between 2025 and 2026 for exceeding the current limit.

The change is part of a package for microentrepreneurs announced by Lula on October 13, which also includes buying up MEIs' bank debts under the Desenrola 3.0 program and a non-repayable transfer of up to R$5,000 per MEI, called Pix MEI. Those other measures still depend on regulations or legislative approval. On the Senate floor, lawmakers from the PL party, such as Carlos Portinho (Rio de Janeiro) and Rogério Marinho (Rio Grande do Norte), said the update was overdue and accused the government of using the measure for electoral purposes. The government maintains that it is an inflation adjustment and that the cost is covered by the federal budget.

What it means for businesses

Under the new cap, an MEI will be able to bring in an average of about R$9,200 a month in 2027 and R$11,700 a month in 2028 without leaving the regime. For businesses opened during the year, the limit is prorated by months of activity: R$9,166.67 a month in 2027 and R$11,666.67 in 2028. Businesses currently operating close to R$81,000 gain room to grow without moving to Simples Nacional, a regime in which taxes are calculated as a percentage of revenue and there are more reporting obligations, such as periodic filings.

On hiring, the limit goes from one employee to two, as long as each is paid exactly one minimum wage or the minimum wage set for their trade. The approved text also allows temporary replacements to be hired when an employee is on legally mandated leave. The bill's rapporteur in the Senate, Carlos Fávaro (PSD, Mato Grosso), argued that larger teams and access to government procurement could encourage formalization and business growth.

On debts, the bill provides for full remission, meaning complete forgiveness, of MEIs' debts with the federal government incurred up to October 13, 2026, including interest, fines and legal charges. The government estimates that about 3.6 million MEIs have debts registered in the federal government's outstanding debt roll (Dívida Ativa da União), totaling R$12.57 billion, according to Agência Senado; other outlets reported figures between R$12.6 billion and R$12.9 billion. To keep the benefit, MEIs must apply for it, drop any lawsuits over the debts and pay their contributions on time for the six months after the law takes effect. The bill also raises the value of public tenders reserved for micro and small businesses from R$80,000 to R$100,000, according to Agência Brasil, and creates a type of tender aimed at MEIs.

“This is an important public policy with the potential to produce positive effects”

— Carlos Fávaro (PSD, Mato Grosso), rapporteur of PLP 186/2026 in the Senate (translated from Portuguese)

What to watch next

The first step is the presidential signature, which may come with vetoes to parts of the text. The higher cap depends on the revenue loss being included in the 2027 to 2029 budget laws; the executive estimates an impact of R$1.57 billion in 2027, R$3.15 billion in 2028 and R$3.38 billion in 2029. Still pending are the procedure for requesting debt forgiveness, the rules for Desenrola 3.0 and Pix MEI, and the debate on adjusting the Simples Nacional brackets for other companies. The speaker of the Chamber of Deputies, Hugo Motta, has committed to bringing the issue to a vote by the end of the year.