Brazil is considering a proposal to increase the annual revenue limit for Microempreendedor Individual (MEI) to R$ 130,000 [1].
This shift in regulatory thresholds matters because it allows a larger number of informal entrepreneurs to formalize their businesses. Formalization provides legal benefits and creates a structured path for small business owners to expand their operations without immediately facing the more complex tax burdens of larger corporate categories.
Marco Vinholi, presenter of the Jovem Pan News segment "Chave do Negócio," provided guidance on how entrepreneurs can open, regularize, and expand their MEI status. Vinholi said that formalizing a micro-enterprise can improve overall business performance by unlocking legal protections and growth opportunities.
Legislative action on this issue began earlier this year. A special commission to study the proposal to raise the revenue limit was created on Thursday, April 16, 2026 [2]. This move reflects an effort to adapt the MEI framework to current economic realities and support the transition from informal work to recognized entrepreneurship.
Alongside these potential changes, the government has maintained strict reporting requirements for existing micro-entrepreneurs. For the current cycle, the deadline for filing the 2026 Income Tax return for MEIs was May 29, 2026 [4].
Tax obligations are tied to specific earnings thresholds. A MEI is required to file an Income Tax return if their income exceeds R$ 35,584 [3]. These regulations ensure that as businesses grow, they contribute proportionally to the national tax system.
As businesses scale, owners must eventually decide when to transition from MEI to other categories, such as Microempresa (ME) or Empresa de Pequeno Porte (EPP). This transition is critical for businesses that outgrow the MEI revenue cap, ensuring they remain compliant with Brazilian law while continuing to scale.
“Formalizing a micro-enterprise can improve overall business performance”
The proposed increase of the MEI revenue limit to R$ 130,000 represents a strategic effort by the Brazilian government to reduce economic informality. By raising the ceiling, the state encourages small-scale entrepreneurs to enter the formal economy, which increases tax compliance and provides workers with social security benefits. However, the strict enforcement of the R$ 35,584 income tax threshold ensures that the government captures revenue from the most successful micro-businesses even before they transition to larger corporate categories.
