Brazil Sets Minimum Wage at R$1,621 for 2026

Quick Summary

The Brazilian government has officially published the new minimum wage value for 2026. President Luiz Inácio Lula da Silva signed Decree No. 12,797, establishing the new national floor at R$1,621 starting January 1, 2026. The decree was published in the Official Gazette on December 24, 2025.

The adjustment represents an increase of R$103 compared to the current value of R$1,518. Workers receiving the minimum wage or benefits linked to this value, such as unemployment insurance and the Continuous Cash Benefit (BPC), will receive the adjusted amount in early February. The calculation for this increase was based on the inflation rate of 4.18% measured by the INPC up to November, plus a real increase of 2.5%.

This policy impacts the economy significantly, serving as a reference for 59.9 million people. However, the increase also impacts public accounts, with an estimated increase of R$43.2 billion in mandatory expenses for the upcoming year.

Official Decree and New Value

The Official Gazette published Decree No. 12,797 on Wednesday, December 24. The document was signed by President Luiz Inácio Lula da Silva and officially authorizes the adjustment of the national minimum wage.

Effective January 1, 2026, the value will rise from R$1,518 to R$1,621. This represents a monetary increase of R$103. The adjustment applies to all formal workers and extends to various social benefits.

Beneficiaries will see the new value reflected in their payments starting in early February. This includes:

• Contract workers earning the minimum wage
• Unemployment insurance recipients
• Beneficiaries of the Continuous Cash Benefit (BPC)

Calculation Methodology

The determination of the 2026 minimum wage followed a specific methodology involving inflation data and economic growth limits. The government utilized the Índice Nacional de Preços ao Consumidor (INPC) to measure inflation.

If the government had followed only the constitutional rule, which mandates adjustment by inflation, the value would have been approximately R$1,582. However, the current administration implemented a policy to increase the wage beyond inflation.

The calculation involved two main components:

1. Inflation measured by the INPC over 12 months up to November (4.18%).
2. The real growth index of the Gross Domestic Product (GDP) from the two previous years, limited to 2.5% due to the fiscal framework.

Combining these factors resulted in the final value of R$1,621.

Economic Impact and Public Accounts

The minimum wage adjustment has a profound effect on the Brazilian economy and public finances. According to technical notes from the Dieese (Department of Union Statistics and Socioeconomic Studies), the minimum wage serves as a reference for 59.9 million people in the country.

While the increase boosts the purchasing power of workers, it also increases federal spending. This is because many benefits, such as retirement pensions and the abono salarial, are legally tied to the minimum wage value.

The fiscal impact is substantial:

• For every R$1 increase in the minimum wage, public expenses rise by approximately R$420 million in 2026.
• The total increase of R$103 corresponds to a growth of about R$43.2 billion in mandatory expenses.

This increase in mandatory spending reduces the resources available for discretionary government spending, potentially affecting federal policies.

Context and Historical Comparison

The Constitution mandates that the minimum wage must be capable of meeting basic vital needs for a worker and their family, including housing, food, education, and health. It also requires periodic adjustments to preserve purchasing power.

Under the administrations of Michel Temer and Jair Bolsonaro, the adjustment followed strictly the inflation rule, resulting in no real gain for workers. In contrast, the current administration has returned to a policy of wage appreciation.

Despite the adjustment, the Dieese calculates that the minimum wage necessary to support a family of four in November of this year would have been R$7,067.18, which is 4.66 times the current national floor. Some economists argue that delinking social security benefits from the minimum wage could help control public debt growth.