Brazilian taxpayers who owe income tax for this year’s return have until Friday, May 29, to pay the full amount in a single installment or make the first payment of the tax due. The deadline coincides with the final day to file the tax return and with the payment of the first batch of refunds, which is the largest in the country’s history, totaling 16 billion reais for 8.7 million taxpayers.
Taxpayers who have not yet filed can no longer set up automatic debit for the single payment or first installment. That option was only available for returns submitted by May 10. From now on, payment must be made through the Darf tax payment form, issued in the tax return software, and paid through online banking at a bank authorized by the Federal Revenue Service or at a branch. It is still possible to arrange automatic debit for later installments, but the first one must be paid by Darf.
If payment is not made by the deadline, a penalty may be charged, reaching up to 20% of the annual income tax owed. Taxpayers whose tax bill is below 100 reais must pay it in a single payment. Amounts above that can be split into up to eight monthly installments, with interest. The second installment carries a 1% charge, and from the third onward the amount includes 1% plus the accumulated monthly Selic rate. Payments after the first installment are due on the last business day of each month through December.
Financial experts say paying in full is usually the best option when possible, but installment payments through the tax authority are still cheaper than taking out a loan. In a simulation of a 1,000-real tax debt, total interest over eight installments is nearly 40 reais, or about 4% of the total, based on the current Selic rate of 14.5% a year. By comparison, a personal loan at an average market rate can cost much more, especially once fees and the IOF tax are included.
Specialists also note that using emergency savings may be a good alternative if paying the tax bill immediately does not threaten financial security. However, redeeming investments to cover the debt requires caution, since early withdrawal can reduce returns or trigger higher income tax on earnings, depending on the product. The best choice depends on each taxpayer’s cash flow, available reserves, and the effective cost of borrowing versus the loss of investment gains.
