Inheritance tax: what do you need to know about ITCMD?

Receiving an inheritance involves much more than simply dividing assets among family members.

Real estate, cash, investments, equity interests in companies, and other assets may be subject to ITCMD (Inheritance and Gift Tax).

And this tax has undergone significant changes.

With the Tax Reform and, more recently, with the publication of the Supplementary Law No. 227/2026, some rules regarding inheritances and gifts have been clarified, while others have changed significantly.

This primarily affects families who own real estate, businesses, or investments, or who are considering estate planning.

Next, we’ll explain in simple terms how the ITCMD works, how much can be charged, and what has changed in 2026.

What is ITCMD (inheritance tax)?

The ITCMD is the tax levied by the states when a person receives property or a right free of charge.

In practice, it mainly occurs in two situations:

• when someone receives a inheritance;

• when someone receives a donation.

Imagine, for example, that a person leaves a property to their children.

When this estate is transferred to the heirs, ITCMD may be levied.

The same is true when a person decides, while still alive, to donate real estate, money, or a stake in a company to another person.

Anyone who wishes to review the national legislation can access the Supplementary Law No. 227/2026 on the Planalto Portal.

The São Paulo Department of Finance also maintains a dedicated portal on ITCMD, with guidelines for state taxpayers.

What changed at ITCMD in 2026?

That is the main point to keep in mind.

The Tax Reform had already established that the ITCMD should follow a logic of progressive tax rates.

In January 2026, the Supplementary Law No. 227 established general national rules for the tax.

That does not mean that the ITCMD has become a federal tax.

It remains a state-level issue.

What happened was a sort of standardization of the rules of the game: there are now national criteria for various issues that previously gave rise to doubts or differing interpretations among the states.

Among the main topics covered are:

• progressive tax rates;

• definition of which state may collect the tax;

• value of the assets used in the calculation;

• donations made in succession;

• equity interests in companies;

• family-owned holding companies;

• property and people located abroad;

• trusts;

• private pension plans and insurance.

For those with significant assets, therefore, it is worth reviewing any estate plans made before these changes took effect.

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Has the ITCMD become progressive?

Yes.

One of the most significant changes introduced by the Tax Reform was the provision that the ITCMD be calculated on a progressive basis according to the amount received.

Translation: The larger the estate being transferred, the higher the tax rate that may be applied, in accordance with the ranges established by each state's laws.

But there is one important detail.

No single ITCMD table was published for the entire country of Brazil.

Each state continues to set its own tax rates, brackets, exemptions, and procedures, in accordance with national rules.

Therefore, two inheritances with similar values may be treated differently depending on the state responsible for collection.

What is the ITCMD tax rate?

It depends on the state.

Currently, there is no single national tax rate.

In São Paulo, for example, state law still uses a tax rate of 4%, although changes at the national level regarding progressivity make it necessary to monitor future amendments to São Paulo state law.

The São Paulo State Government itself provides a Official system for filing and checking ITCMD returns.

Progressive tax brackets already exist in other states.

In Rio de Janeiro, for example, tax rates may vary depending on the value reported.

Goiás and the Federal District also use systems with tax brackets.

Therefore, before making any calculations related to inheritance or gifts, it is important to verify Which state has the authority to collect the tax, and which law was in effect on the date of the transfer?.

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Who pays the inheritance tax?

Simply put: usually, who receives the estate.

In the case of an inheritance, the tax is owed by the heir or legatee who receives the assets.

In a donation, the taxpayer is usually the recipient of the donation.

State law may establish other specific responsibilities, so each situation must be analyzed on a case-by-case basis.

In which state must the ITCMD be paid?

This is a very common question.

And it is not correct to simply say that the tax is paid in the state where the probate proceedings were initiated.

For a property located in Brazil, for example, the tax is based on the state where that property is located.

Imagine someone who lived in São Paulo but owned a house in Minas Gerais.

The rule applicable to the property takes into account the location of that property.

For cash, investments, equity interests in companies, and other personal property, different criteria apply depending on the domicile of the decedent or donor.

Law No. 227 of 2026 specified these situations precisely to reduce conflicts between states. 

How is the ITCMD calculated?

In simple terms, the calculation is based on the value of the transferred assets.

Imagine a taxable estate of R$ 500,000 in a hypothetical scenario in which the applicable tax rate is 4%.

The basic calculation would be:

R$ 500,000 × 4% = R$ 20,000

But the actual calculation may be more complex.

Depending on the assets, there may be:

• different tax brackets;

• exemptions;

• real estate;

• investments;

• companies;

• debts;

• rights;

• specific state regulations.

In addition, Law No. 227 of 2026 reinforced the use of the market value in various situations. 

That's exactly where planning makes a difference.

And what if the inheritance includes a business?

This is where one of the most important changes for business owners comes into play.

Imagine that someone owns a company valued at a few million reais and leaves their shares to their children.

The ITCMD doesn't just look at real estate and money.

The Equity interests also have economic value and may be included in the tax base.

Law No. 227 of 2026 established more detailed rules for calculating the value of shares and stock in companies that are not publicly traded.

Generally speaking, one should not simply choose a very low book value for the shares and consider the matter settled.

The analysis must take into account the economic value of that interest in accordance with the criteria established by law. citeturn671789search3

For business owners, this makes succession planning even more important.

CLM also offers specific content on corporate planning, explaining how to organize the transfer of assets and control across generations. citeturn449823search9

Does making several small donations reduce the ITCMD?

Not necessarily.

This strategy became even more delicate following the enactment of LC 227/2026.

For a long time, some families divided a large transfer into several smaller gifts in an effort to take advantage of lower tax brackets or exemption limits.

The new legislation stipulates that Successive donations between the same donor and the same recipient may be combined, in accordance with the period established by state law.

For example:

A father donates R$ 100,000 to his son and, some time later, makes another donation of R$ 100,000.

Depending on that state's rules, these transactions may be considered together to determine the tax due. citeturn671789search3

In other words, splitting up a donation does not automatically mean paying less tax.

Is it still worth donating your assets while you're still alive?

That might work.

But it's not a magic formula.

Making donations during one's lifetime can allow a family to plan their estate in advance and prevent all decisions from being concentrated in the probate process.

It is also possible to set certain conditions for the transfer of assets.

One of the best-known is the retention of usufruct.

Imagine that parents transfer a property to their children but retain the right to live in it or collect rent.

This type of structure can make sense as part of a succession plan.

The tax impact, however, must be analyzed based on the state and the structure used.

To better understand this process, it’s also worth reviewing the CLM content on succession planning. citeturn449823search1

Do family holding companies still reduce inheritance tax?

Here, we need to separate myth from reality.

One A family holding company can be an excellent tool for estate planning, but it should not be marketed as an automatic solution for paying less ITCMD.

A holding company allows certain assets and equity interests to be placed within a company and succession to be organized through that company’s shares.

This can make it easier to:

• the administration of assets;

• the entry of the heirs;

• the allocation of quotas;

• establishing family rules;

• management continuity;

• succession planning.

On the other hand, the transfer of these shares without consideration may also give rise to ITCMD.

And LC 227/2026 established more detailed criteria for determining the value of these equity interests. citeturn671789search3

Therefore, the correct question is no longer:

“Do family-owned holding companies pay less tax?”

And it became:

“Does a holding company make sense for this family’s assets and goals?”

CLM recently published a study specifically on Benefits, Risks, and When It's Really Worth It to Set Up a Family Holding Company. citeturn449823search7

Suggested institutional citation for approval by Marco Aurélio:
“Estate planning should not begin with choosing a holding company or seeking tax savings. First, we need to understand the estate, the family, and the goals of the estate planning process. Only then can we determine which structure truly makes sense.”
Marco Aurélio, Director of CLM Controller

Marco Aurélio's position as Director of CLM Controller is listed on the company's official authors page. citeturn671789search0

Do private pension plans pay inheritance tax?

Law No. 227 of 2026 also provided an important definition regarding social security.

The new legislation established cases in which ITCMD is not levied on benefits arising from supplemental private pension plans, insurance policies, savings plans, and other similar contracts of a compensatory nature, subject to the conditions set forth in the law. citeturn671789search3

This point is particularly important because the taxation of some of these products has already been the subject of legal and tax disputes in Brazil.

Even so, each product must be analyzed based on its structure.

It is not enough for an investment to have “pension” in its name to automatically determine its tax treatment.

What if there are assets abroad?

Families with international assets also need to be aware of this.

The legislation now addresses situations in which:

• The deceased lived outside Brazil;

• the donor lives abroad;

• there are assets outside the country;

• the beneficiary is in Brazil;

• There are structures such as trusts.

Law No. 227 of 2026 established criteria for determining when Brazil and its states may levy the ITCMD on these transactions. citeturn671789search3

For international estates, therefore, it is even more important to analyze the structure before making any transfers.

Is it possible to legally pay less ITCMD?

In some cases, yes.

But the economy isn't something you can just follow a set formula for.

Planning may involve various tools, such as:

• gift during one's lifetime;

• usufruct reservation;

• corporate structure;

• family-owned holding company;

• social security;

• insurance;

• governance rules;

• will;

• asset reorganization.

The ideal combination depends on the assets, the state, the family structure, and the goals of those involved.

A family that owns two properties has completely different needs from another family that controls several companies and has investments in Brazil and abroad.

That's why copying someone else's estate plan is usually a terrible idea.

Why should you create a succession plan?

Estate planning isn't just about paying less tax.

In fact, that's often not even the biggest benefit.

Planning ahead can help you:

• to prevent disputes among heirs;

• determine who will manage a company;

• manage real estate and investments;

• set aside funds to cover succession costs;

• establish rules among family members;

• reduce red tape;

• provide tax predictability;

• ensure business continuity.

When it comes to a family business, this care becomes even more important.

A poorly organized succession plan can affect not only the heirs, but also employees, customers, suppliers, and the company’s very survival.

What should you do before transferring an estate?

Before donating assets, setting up a holding company, or initiating any succession planning, there are a few points that need to be considered.

First, it is necessary to take stock of all assets.

Next, evaluate:

• property values;

• investments;

• equity interests in companies;

• debts;

• location of the assets;

• heirs;

• marital property regime;

• family goals;

• taxes involved.

Based on this information, it is possible to compare scenarios.

In some situations, a holding company can be an excellent choice.

In other cases, a direct donation may be simpler.

And there are cases in which maintaining the current structure for a little while longer is the most efficient option.

Conclusion: planning and expert support make the difference

O inheritance tax (ITCMD) is a reality that entrepreneurs and families have to deal with when transferring their assets. Although it represents a relatively low percentage Compared to taxes in other countries, the ITCMD can reach significant amounts - especially for large estates - and, if not taken into account when planning, can create financial and bureaucratic difficulties for successors.

The good news is that, as we've seen, there is room for planning: knowing the laws of each state, using instruments such as gradual donations and family holdings, and taking advantage of exemptions are all measures that enable reducing the tax burden within the law.

A CLM Controller accounting is a consulting and accounting firm with extensive experience in estate and succession planning for entrepreneurs. Among the services offered are setting up family and property holdings, A tailor-made strategy to protect assets and optimize the transfer of assets. With the support of CLM Controller, it is possible to design an efficient succession plan - from analyzing the ITCMD rates in the states where you have assets, to drafting legal instruments (such as usufructs, donations, corporate agreements), to creating and managing a holding company that meets your family's needs.

If you want to educate yourself further about inheritance tax or are already thinking about structuring the succession of your business and personal assets, contact CLM Controller. We'll be happy to help you with a personalized diagnosis and the implementation of the most appropriate strategies - so you guarantee peace of mind for the future, safety for your family and possibly significant savings of time and resources.

After all, succession planning is not just about taxes, but about preserve the legacy built with effort. With the right guidance, you can turn an obligation (paying taxes) into a strategic action for the well-being of everyone involved.