Do LCI and LCA Pay Income Tax? Rules for Individuals and Corporations in 2026

What are LCI and LCA?

Before analyzing the tax treatment, it’s worth reviewing how these investments work.

A LCI (Real Estate Credit Bill) It is a security issued by financial institutions to raise funds for financing the real estate sector.

The LCA (Agribusiness Credit Bill) It has a similar structure, but the funds raised are used to finance agribusiness activities.

In practice, the investor lends money to the issuing bank and receives a predetermined return, which may be:

• Fixed-rate;
• Post-fixed;
• Hybrid (inflation-indexed).

These investments tend to attract conservative investors due to the predictability of their returns and the low credit risk, provided that the FGC’s coverage limits are respected.

Do LCI and LCA pay individual income tax?

One of the biggest advantages of these securities is precisely the tax benefit granted to individuals.

As a rule, Income from LCI and LCA remains exempt from income tax for individual investors, provided that the conditions set forth in tax law are met.

This means that all income earned goes entirely to the investor, with no income tax withheld at source.

This feature leads many investors to compare LCIs and LCAs with CDBs, Tesouro Direto, and other fixed-income products.

In many cases, a security with a lower nominal yield may actually offer a higher net return precisely because it is not subject to taxation.

Do LCI and LCA pay corporate income tax?

Here is one of the biggest differences. When the investment is made by legal entity, the exemption granted to individuals not applicable.

This means that companies must comply with the tax treatment applicable to financial income, taking into account the tax system in place and the applicable tax regulations.

In other words, taxation is no longer based solely on financial results but now involves the company’s accounting and tax matters. Incidentally, it is precisely on this point that the tax planning It makes a difference.

Taxation of financial investments made by companies may vary depending on the tax regime. Each regime has its own rules for recognizing and taxing financial income.

Companies Under the Actual Profit Tax Regime

In Real Profit, income from financial investments is included in the company's earnings.

Consequently, they form the basis for calculating the taxes on income, in accordance with applicable law.

In addition, the correct accounting treatment of this income is essential to avoid distortions in the accounting and tax results.

Larger companies typically monitor these applications as an integrated part of the treasury financial planning.

Companies Under the Presumed Profit Tax System

Under the Presumed Profit regime, financial income is subject to specific treatment as provided for in tax law.

Although the calculation of IRPJ and CSLL on operating activities is based on presumed tax bases, financial income is subject to its own taxation rules.

Therefore, it is important to analyze the following separately:

• Operating revenue;
• Financial income;
• Investment returns.

Mixing these pieces of information can lead to errors in the calculations.

Simples Nacional companies

The Simples Nacional system also has its own specific features. Although the main taxation is concentrated in the DAS, financial income may be treated differently from operating revenue.

Like this, Financial transactions carried out by the company must be recorded in the accounting records to verify its tax and accounting implications.

Inside Tax Reform 2025One of the federal government's proposals is to end the IR exemption on income from LCIs (and LCAs, their agribusiness equivalents). In June 2025, the Provisional Measure 1.303/25 foreseeing the collection of Income Tax at source, 5%, on securities that are currently exempt.

This rate fixed from 5% would be applied as of January 1, 2026, respecting the principle of annuality, and would initially apply to new investments made as of that date. In other words, investments in LCIs made up to 12/31/2025 would remain exempt until maturity, while bonds issued from 2026 onwards would be taxed on interest.

During its passage through Congress, however, Carlos Zarattini's report suggested adjustments. The most recent version of the proposal raises the IR rate to 7.5% on LCI/LCA income for individuals, instead of the initial 5%. At the same time, it kept other incentivized real estate securities like the CRI (Real Estate Receivables Certificates) and Real Estate Funds (FIIs) for individual investors.

In other words, LCIs would lose part of their exclusive tax advantage and would pay a modest - but no longer zero - income tax on new investments made after the law came into force.

It is important to note that, despite this change, the proposed taxation is still much lower than the rates for other fixed-income investments common. Today, a CDB, for example, pays between 15% and 22.5% in income tax (following the regressive table depending on the term).

LCI, on the other hand, would pay only 5% to 7.5%, depending on the final text approved. The government argues that this measure aims to reduce distortions in the market, bringing the tax burden between different financial products closer together and broadening the tax base without increasing direct taxes. Official estimates point to a potential additional revenue of up to R$ 18 billion over the next few years with the end of the exemption for LCIs/LCAs.

What has changed recently in terms of taxation?

In recent years, the financial market has been the subject of numerous discussions regarding the taxation of fixed-income investments.

These changes have increased the need for constant monitoring of legislation, particularly by companies that hold large amounts of cash in investments.

Although the exemption for individuals remains an important distinguishing feature of the LCIs and LCAs, financial managers should stay abreast of legislative changes, as tax changes can affect the net return on investments.

For this reason, treasury decisions They should not consider only the returns advertised by financial institutions.

It is also necessary to evaluate:

• Tax implications;
• Liquidity;
• Due date;
• Cash needs;
• The company's financial strategy.

• CDB paying 110% of the CDI;
• LCI paying 95% of the CDI.

At first glance, the CDB seems more attractive. However, after deducting the income tax levied on the CDB, the net return may end up being lower than that of the LCI.

Therefore, comparing only the interest rate offered can lead to poor decisions.

For companies: In the corporate environment, the analysis changes completely. Since taxation follows different rules, the net gain will depend on factors such as:

• Tax system;
• Accounting;
• Investment timeline;
• Need for liquidity;
• Financial planning.

In some cases, a CDB may offer a better balance between liquidity and return. In others, LCIs and LCAs may better suit the company’s cash management strategy.

It will all depend on a comprehensive analysis of finance and taxation.

Read also: The informality of rents is over, see what changes! 

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For this reason, representatives of the sector have expressed concern: according to the president of the Caixa Econômica Federal (main housing finance bank)In other words, it drives a chain of activities in the real estate sector - and taxing this instrument could curb this momentum.

For the real estate market as a wholeThe taxation of LCIs comes at a delicate time. In recent years, there have been sharp drop in savings accountswhich has traditionally been the main source of funds for housing loans in Brazil.

Data from Abecip (Brazilian Association of Real Estate Credit and Savings Entities) show that the share of LCIs in the sources of real estate financing doubled from 11% to 22% between 2020 and 2023while the share of savings fell from 47% to 31%.

This is because, with constant net withdrawals from savings accounts and high demand for real estate credit, banks have increasingly turned to LCIs to raise money and continue lending for the purchase and construction of real estate.

In this context, taxing LCIs could cool down this crucial alternative source of funding. If fewer investors are interested in LCIs (or demand higher interest rates to invest), banks may find it difficult to maintain the volume of real estate loans at the same pace.

Ultimately, this could mean scarcer or more expensive credit for building new homes and developmentsThis will have an impact on developers and the entire construction chain.

In short, the direct impact of LCI taxation on real estate financing should be a gradual increase in interest rates on housing loans and possibly a smaller supply of credit than there would be if the exemption were maintained.

The exact effect will depend on how banks and investors react to this change (as we'll see below), but it's prudent for buyers and market players to prepare for a scenario of slightly less advantageous financing from now on.

How can the tax burden on business investments be reduced?

Any reduction in the tax burden must always be within the limits of the law.

Some best practices include:

• Periodic tax planning;
• Analysis of the most appropriate tax system;
• Review of the investment policy;
• Integration between accounting and treasury;
• Monitoring changes in the law;
• Correct classification of financial revenue.

More important than seek the investment with the highest nominal return It is a matter of determining which one offers the best net return after all tax implications have been taken into account.

This type of analysis typically generates significant gains for companies that hold large amounts of funds in financial investments.

The relationship between LCIs and bank funding and real estate credit

LCIs exist precisely to connecting income-seeking investors with the banks' need to obtain resources to lend in the real estate sector.

Before this change, this connection was beneficial for both sides: the investor earned a good tax-free return, and the bank got money at a lower cost to pass on in financing. This is because, due to the tax exemption, investors accepted earning a lower rate on LCIs than they would have demanded on other products with a similar risk, such as CDBs or government bonds.

In practice, the LCI lowers funding costs for the banks, since they could pay, for example, 95% of the CDI on an LCI (which was equivalent to 95% net for the individual investor), instead of having to pay 110% of the CDI on a CDB to offer the same net return (taking into account CDB taxation).

With the taxation of LCIs, this dynamic partially changes. Investors will demand a higher return for LCIs, as they will now have to deduct IR from the interest received. If 95% of the net CDI was already attractive, now you'll have to pay a higher percentage of the CDI to achieve the same net yield.

Experts calculate that for an LCI with a term of ~1 year that yields 100% of the CDI exempt, it will need to yield around 107-108% of gross CDI to deliver the same net 100% at a rate of 7.5%. In other words, banks will have to raise the rates offered on new LCIs to continue raising funds from individual investors. This increase in the cost of funding tends to be passed on, at least in part, to the interest charged on real estate loans (or reduced margins for banks).

It's worth remembering that banks already have other sources of funding for real estate loans, mainly the savings accounts and also instruments such as LIG (Letra Imobiliária Garantida) and securitization (CRI).

Savings accounts, for example, have regulated interest rates (currently 6.17% per year + TR when the Selic rate is above 8.5%) and are exempt from IR, but in recent times they have suffered high net withdrawals, limiting their contribution to the sector.

LIGs and CRIs are alternatives: CRI (Real Estate Receivables Certificates) are securities backed by real estate credits, also exempt from personal income tax and used to raise money for specific projects or financing portfolios. However, CRIs generally don't have the FGC guarantee and can have higher risks, so they pay higher interest rates and are more sought after by sophisticated investors.

With the taxation of LCIs, it is possible that part of the resources migrate to competing products. Investors who value the exemption can opt for CRI/CRA (which are still exempt) or by Real Estate Funds (FIIs)These are the products that have had their income exemption maintained in the reform. However, it is important to note that each product has different risk, liquidity and term characteristics.

A savings should remain exempt and have daily liquidity, but their profitability tends to be lower in high interest rate scenarios (and depends on the government's interest rate policy). Now incentivized debentures (such as infrastructure) are still exempt for individuals in the new proposal, but they are not focused on real estate and generally finance other sectors.

For banks, the challenge will be reorganizing the funding mix for real estate loans. If LCIs become less attractive and funding falls, they may resort more to CRIs or other instruments, or even limit the supply of credit a little.

Some banks may pass on the full 5-7.5% rate to the investor (offering slightly higher interest on new LCIs) in order to keep their bills competitive. Others may promote their real estate funds or securitized credit portfolios more as a way of raising money.

In short, the LCI will continue to be an important piece of the housing finance puzzle, but will have a higher cost of funding for banksThis will require them to adapt to this new scenario. And, as we have seen, this tends to result in slightly less advantageous conditions for real estate borrowers.

Market and expert reactions to change

A CBIC and other civil construction organizations have even drawn up technical notes pointing out negative impacts, such as the possible increase of up to 0.7 percentage points in financing rates, as mentioned.

Investment experts have commented that the change, despite reducing the attractiveness of LCIs, it doesn't make them unfeasible. Many point out that even with 5%-7.5% tax, the LCI will still have interesting net yields and lower IR than most fixed-income securities. In the short term, it's possible that there will be some migration of funds to tax-free alternatives (such as CRIs, FIIs or savings accounts), but we also expect a gradual adaptation of the fixed income market.

Another point mentioned by analysts is the macroeconomic situation. If the economy's basic interest rates fall again in the next few years (which tends to happen if inflation remains under control), the difference in profitability between products could change.

In short, the market received the news of the taxation of LCIs with a dose of concern, mainly due to the fact that potential effect on real estate loans. However, many recognize that "came out less worse than it could have" - After all, a small rate is being discussed (5-7.5%) and several products remain exempt (FIIs, CRIs, etc.), unlike the feared scenarios in which even real estate funds would lose their exemption.

Even so, the almost unanimous recommendation among experts is: follow closely the passage of the law and its developments, and already adjust to the new fixed income normal with a little tax.

Strategies and recommendations for investors and buyers facing the new scenario

Faced with the taxation of LCIs, both investors and those planning to buy financed real estate should adopt strategies for adapt smoothly. Here are some practical recommendations:

• Re-evaluate your investment strategy: If you're an investor, it's time to review the composition of your fixed income portfolio. LCIs are still good optionsBut now they require a closer look at net income.

• Anticipate opportunities (when possible): Until the end of 2025, it is still possible to find LCIs exempt from IR. If there are offers with attractive terms and rates that fit in with your strategy, consider investing before the turn of the year can guarantee tax-free yields until the bond matures (remembering that after 2026, new LCIs will be taxed).

• Keep an eye on mortgage rates: If you're planning to buy a property with a mortgage, keep an eye on interest rates over the next few months. As we explained, there is pressure for a slight increase in financing rates due to the taxation of LCIs.

• Negotiate and compare credit options: Banks may react differently to this change. Some may immediately raise interest rates on loans; others may hold off so as not to lose customers, or create temporary promotions.

• Rely on specialized help: For both investments and real estate financing, this is a time when consulting experts can make a difference.

Conclusion

The taxation of LCIs represents a significant change in the Brazilian real estate market. It will impact investors, buyers and financial institutions alike, requiring planning and adaptation. Although yields may decrease and interest rates increase slightly, with the right strategy and guidance it is possible to minimize impacts and take advantage of opportunities.

A CLM Controller is an accounting firm with over 40 years' experience, specializing in Real Profit and Presumed Profit companies, working in various areas such as accounting, tax, finance and payroll. We also offer strategic consulting, tax planning and specialized auditing to ensure that your company is always in compliance and makes the most of tax opportunities.

Do you want to understand how changes in taxation can affect your investments and business? Get in touch and speak to one of our experts today.

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