On June 12, 2025, Brazil introduced a new cryptocurrency tax law that implements a flat 17.5% tax on all capital gains, replacing the previous tiered system. This change eliminates the tax exemption for individuals selling up to 35,000 Brazilian reais (~$6,300) monthly, impacting small investors who previously paid no taxes on modest gains. For instance, a 30,000-real profit now incurs a 5,250-real tax liability. Medium investors, who were taxed at 15% on gains below 5 million reais, will also see an increase in their tax burden. However, high-net-worth individuals benefit as gains over 30 million reais previously taxed at 22.5% are now capped at 17.5%. The new law covers all digital asset activities, including those held offshore, in decentralized finance, and non-fungible tokens. This reform is part of Brazil’s broader fiscal strategy to expand its tax base and enforce stricter regulations, reflecting the government's response to a rising tax burden that reached 32.32% of GDP in 2024. Looking ahead, stricter reporting standards and potential legislation to allow salary payments in crypto may be on the horizon.

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