How is Payroll Calculated in Brazil?
In Brazil, payroll is governed primarily by the Consolidation of Labour Laws (CLT — Consolidação das Leis do Trabalho), the federal Income Tax rules (IRRF), and the social security (INSS) and FGTS legislation. Wages are paid monthly, and the employer acts as the withholding agent: each pay run, the employer deducts withholding income tax (IRRF) and the employee's INSS contribution from gross pay and remits both to the authorities. On top of salary, the employer pays its own INSS contribution, work-accident insurance (RAT), third-party levies (Sistema S), and an 8% FGTS deposit. All events are reported through the government's unified eSocial platform.
Net pay: from gross salary to take-home
An employee's net (take-home) pay is the gross salary minus the mandatory employee deductions. In simplified terms:
Net pay = Gross salary − Employee INSS (7.5%–14%, capped) − Withheld IRRFPayment of wages
Under the CLT, salaries must be paid at least once a month, no later than the fifth business day of the following month. Payment is made in Brazilian reais (BRL), typically by bank transfer. Employees are entitled to a mandatory 13th-month salary and to 30 days of annual vacation plus a one-third vacation bonus, both of which flow through payroll (covered below). On termination, the employer must settle all outstanding amounts within the statutory deadline.
Overtime and premium pay
Overtime and work on rest days or public holidays attract premium rates that must be added to payroll. The standard statutory minimum rates are:
Overtime on a normal working day
+50% on the hourly wage
Work on a Sunday or public holiday
+100% (double pay)
Night work (10 pm – 5 am)
+20% night premium (reduced 52.5-min hour)
Type of work
Minimum premium
Overtime on a normal working day
+50% on the hourly wage
Work on a Sunday or public holiday
+100% (double pay)
Night work (10 pm – 5 am)
+20% night premium (reduced 52.5-min hour)
Withholding Income Tax (IRRF)
Brazil taxes employment income under a progressive scale from 0% to 27.5%. Employers withhold Imposto de Renda Retido na Fonte (IRRF) from every salary payment based on a monthly table. Tax is charged on taxable income — gross pay after deducting the employee's INSS contribution and permitted allowances. Each rate applies only to the slice of income within its band; in practice payroll systems apply the rate to the full base and subtract the bracket's fixed "deductible amount" to reach the same result.
Residents are taxed on worldwide income; the same monthly IRRF table is used for salary withholding, with an annual adjustment return (DIRPF) filed by the employee, usually by the end of April.
IRRF monthly progressive tax brackets
The table above is the statutory monthly IRRF table effective February 2024 (carried into 2025). Under Law 15,270/2025, from January 2026 monthly income up to BRL 5,000 is fully exempt, with partial relief up to BRL 7,350. Always confirm which table applies to the payroll month you are running.
Monthly taxable income (BRL)
Tax rate
Deductible amount (BRL)
Up to 2,259.20
Exempt (0%)
—
2,259.21 – 2,826.65
7.5%
169.44
2,826.66 – 3,751.05
15%
381.44
3,751.06 – 4,664.68
22.5%
662.77
Monthly taxable income (BRL)
Up to 2,259.20
Tax rate
Exempt (0%)
Deductible amount (BRL)
—
Monthly taxable income (BRL)
2,259.21 – 2,826.65
Tax rate
7.5%
Deductible amount (BRL)
169.44
Monthly taxable income (BRL)
2,826.66 – 3,751.05
Tax rate
15%
Deductible amount (BRL)
381.44
Monthly taxable income (BRL)
3,751.06 – 4,664.68
Tax rate
22.5%
Deductible amount (BRL)
662.77
Monthly taxable income (BRL)
Over 4,664.68
Tax rate
27.5%
Deductible amount (BRL)
896.00
Deductions and allowances
Before applying the brackets, taxable income is reduced by the employee's
INSS contribution and by permitted legal deductions. The most common include:
- INSS contribution: fully deductible from the withholding base
- Dependants allowance: a fixed monthly amount per qualifying dependant (around BRL 189.59)
- Private pension (PGBL) and alimony payments, within statutory limits
- Simplified monthly deduction: a flat discount (BRL 607.20 per month, which since May 2025 delivers an effective exemption on income up to around BRL 3,036 — two minimum wages) that may be used instead of the itemised legal deductions when more favourable
Because thresholds and allowances are re-indexed frequently, employers should confirm the current year's figures before setting up withholding.
Social Security (INSS)
Employees are compulsorily insured under the National Social Security Institute (INSS). The employee contribution is progressive from 7.5% to 14%, calculated band-by-band on monthly wages up to a ceiling (teto). For 2025 the contribution ceiling salary is BRL 8,157.41, giving a maximum employee contribution of BRL 951.63 per month — any salary above the teto does not increase the employee's INSS. The employer withholds this amount and pays its own, separate INSS contribution on top of salary.
INSS funds retirement, disability, sickness, maternity, and death benefits. Both shares are reported through eSocial and paid via the consolidated DCTFWeb / DARF by the 20th of the following month.
Employee INSS contribution brackets (2025)
The bands are progressive: each rate applies only to the portion of salary within its range, so the effective rate is always below 14%. Salary at or above the teto (BRL 8,157.41 in 2025) caps the employee contribution at BRL 951.63. Both the bracket thresholds and the ceiling are re-indexed every January with the minimum wage — confirm the current-year table.
Monthly salary band (BRL)
Rate (on the band)
Monthly salary band (BRL)
Rate (on the band)
Up to 1,518.00
7.5%
1,518.01 – 2,793.88
9%
2,793.89 – 4,190.83
12%
4,190.84 – 8,157.41
14%
Employer Payroll Costs
On top of gross salary, Brazilian employers pay a set of statutory charges. The largest are the employer INSS (CPP) at 20%, the FGTS deposit of 8%, work-accident insurance (RAT/SAT) of 1%–3%, and third-party levies (Sistema S / terceiros) of roughly 5.8%. Combined, these bring the direct employer burden to around 35% of payroll, before mandatory benefits such as the 13th salary and vacation bonus.
Main employer contributions
Employer INSS (CPP)
20% of gross payroll (no ceiling for the employer share). Certain sectors pay a payroll-substitution rate (CPRB) instead.
FGTS
8% of gross pay deposited monthly into the employee's individual severance account (also on the 13th salary).
RAT / SAT
1%–3% work-accident insurance, set by the company's CNAE risk level (adjusted by the FAP factor).
Sistema S / terceiros
Roughly 5.8% in third-party levies (SESI/SENAI, SEBRAE, INCRA, salário-educação, etc.), varying by sector.
Employer INSS (CPP)
20% of gross payroll (no ceiling for the employer share). Certain sectors pay a payroll-substitution rate (CPRB) instead.
FGTS
8% of gross pay deposited monthly into the employee's individual severance account (also on the 13th salary).
RAT / SAT
1%–3% work-accident insurance, set by the company's CNAE risk level (adjusted by the FAP factor).
Sistema S / terceiros
Roughly 5.8% in third-party levies (SESI/SENAI, SEBRAE, INCRA, salário-educação, etc.), varying by sector.
13th Salary, Vacation & Statutory Filing
Two mandatory pay events shape the Brazilian payroll calendar — the 13th salary and vacation with its one-third bonus — and both must be reported through eSocial alongside the monthly cycle. Missing these obligations exposes the company to fines, so most employers automate the calendar below.
13th salary (décimo terceiro)
Every employee is entitled to a 13th-month salary, equal to one month's pay (pro-rated for partial years). It is paid in two installments: the first (50%) by 30 November and the second by 20 December. The first installment carries no deductions; INSS and IRRF are withheld on the second installment, and FGTS is deposited on both.
Vacation and the one-third bonus
After 12 months of service, employees earn 30 calendar days of paid vacation. On top of the normal vacation pay, the employer must add a one-third (1/3) constitutional vacation bonus, and the total must be paid up to two days before the vacation begins. Vacation pay is subject to INSS, IRRF, and FGTS through payroll.
Key payroll filings and deadlines
eSocial
Unified digital reporting of hires, payroll events, and terminations. Monthly payroll events are transmitted each cycle (typically by the 15th of the following month).
DCTFWeb / DARF
Consolidates INSS and withheld IRRF from eSocial into a single tax payment slip, due by the 20th of the following month.
FGTS (via FGTS Digital)
Monthly 8% deposit into each employee's FGTS account, generated from eSocial data and due by the 20th of the following month.
DIRF / annual reporting
Annual return of income and tax withheld. The standalone DIRF is being phased out in favour of EFD-Reinf / eSocial reporting — confirm the current obligation for the year.
eSocial
Unified digital reporting of hires, payroll events, and terminations. Monthly payroll events are transmitted each cycle (typically by the 15th of the following month).
DCTFWeb / DARF
Consolidates INSS and withheld IRRF from eSocial into a single tax payment slip, due by the 20th of the following month.
FGTS (via FGTS Digital)
Monthly 8% deposit into each employee's FGTS account, generated from eSocial data and due by the 20th of the following month.
DIRF / annual reporting
Annual return of income and tax withheld. The standalone DIRF is being phased out in favour of EFD-Reinf / eSocial reporting — confirm the current obligation for the year.
Brazil Payroll Processing
Because payroll in Brazil ties together the Receita Federal (IRRF and DCTFWeb), the INSS, the FGTS fund, and the CLT (wages, 13th salary, vacation, and overtime) — all routed through eSocial — many companies outsource processing to a local expert or an Employer of Record. A specialist provider can register employees, run the monthly cycle, calculate and remit INSS, IRRF and FGTS, manage the 13th salary and vacation, and keep the business compliant as rates and thresholds change.
How can Glints help you?
You can streamline your company's payroll in Brazil by outsourcing to Glints, your expert PEO and EOR solution. With our regional payroll expertise, we ensure compliance with Brazil's CLT, income tax rules, and INSS and FGTS obligations, and handle salary calculations, IRRF withholding, social security, the 13th salary, and eSocial filings — delivering smooth and efficient payroll management for your business.
Book a schedule with our team to discover how we can manage payroll and tax for your team in Brazil.
Social Security (INSS)