Brazil’s IOF Tax in 2026: What US Companies Need to Know

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Paying Contractors in Brazil: How the IOF Tax Works After the 2025 Changes

Four in ten Brazilians working for international companies now ask to be paid in dollars instead of reais. Since Brazil made the unpopular decision to raise its taxes on foreign exchange in 2025, contractors are looking for ways to keep more of their paycheck, and it’s up to the companies hiring them to offer a payment setup that makes that possible.

US companies hire more Brazilian contractors than companies in any other country. What some may be unprepared for is the added cost of moving money across Brazil’s borders from the IOF tax. Most money leaving Brazil is now taxed at 3.5%, and even contractors who earn in dollars can see IOF taken out of their pay when it’s converted to reais.

The IOF tax is unfamiliar to many outside of Brazil, and it can be complicated: the rate depends on which direction the money moves and how the payment is classified, and the government can change it at any time by decree. Below, we cover what the IOF is, what changed in 2025, and how US and Brazilian businesses can better account for the IOF tax when planning cross-border payments.

Slash is a financial platform for businesses that pay and get paid across borders.¹ If you’re a US company working with Brazilian contractors, Slash offers a simpler way to pay: you can send reais over Pix straight from your business account. If you’re a Brazilian business that bills international clients or pays overseas vendors, the Slash Global Account is a separate dollar operations account available in more than 130 countries that lets you get paid and pay in USD or with Pix for payments in reais.³

What is IOF in Brazil?

IOF, short for Imposto sobre Operações Financeiras, is Brazil's federal tax on financial transactions. It applies to credit, foreign exchange, insurance, and securities. The bank, card issuer, or FX provider handling the transaction usually deducts it at the source, and it usually shows up as a deducted line on a statement rather than a separate bill.

IOF is unusual compared to other state-levied taxes because it’s set and controlled by Brazil’s president. The Executive can change IOF rates by decree without a vote in Congress, and the new rates can take effect immediately. In theory, the design makes IOF a regulatory tool for steering capital flows. In 2025, the government raised rates to help close the fiscal budget, a departure from IOF precedent.

What changes were made to IOF in 2025?

In May 2025, President Luiz Inácio Lula da Silva issued a decree raising IOF rates on credit, insurance, and foreign exchange. After two revisions, the final version (Decree 12,499) was published on June 11 of that year. Two weeks later, Congress voted to overturn it.

The government took the dispute to the Supreme Federal Court. A court-brokered mediation ended in stalemate, and on July 16, 2025, Justice Alexandre de Moraes reinstated nearly all of the decree. He struck only a tax on a supplier-financing arrangement known as risco sacado. The higher rates have applied since.

The Finance Ministry projected the decree would bring in R$27.7 billion in 2026. Voters saw it differently: 79.5% of Brazilians opposed the increase in a poll taken that July.

Brazil's Current IOF Rates on Foreign Exchange

The 2025 decree pushed most IOF outbound rates to 3.5% and left inbound rates where they were, at 0.38% or zero. The current FX rates below cover the transactions businesses and contractors run into most:

Transaction	Before 2025	Current IOF rate
Card spend and ATM withdrawals abroad	3.38%	3.5%
Buying foreign cash	1.1%	3.5%
Sending money to your own account abroad	1.1%	3.5%
Paying for services abroad and other outbound transfers	0.38%	3.5%
Remittances abroad for investment	1.1%	1.1%
Other inbound transfers	0.38%	0.38%
Export revenue (goods and services)	0%	0%

The most significant change was for card-related activity abroad and outbound foreign transactions. Brazil had been cutting IOF on foreign card spending every year, with zero scheduled for 2028. The 2025 decree canceled the phase-down and set the rate at 3.5%.

What IOF Means for Brazilian Contractors Paid in USD

If you’re a US business that works with contractors in Brazil, the way you pay them affects how much of each invoice they keep. IOF can apply at two points: if the payment is improperly categorized and converted into reais, or when the contractor spends or sends that money abroad.

Getting Paid From Abroad: Usually 0% or 0.38%

A contractor who invoices a foreign client is exporting a service, and export revenue converted into reais carries a zero IOF rate. The zero rate depends on the payment being classified as an export. A transfer recorded without that classification, which is common when contractors get paid through a personal account instead of a registered company, can be charged 0.38%. Even then, the FX spread and platform fees on the same payment usually cost more than the tax.

Spending and Moving Money Out: 3.5%

Most of the IOF a contractor pays comes after the money arrives. Contractors paid in dollars often have dollar expenses too, from software subscriptions to equipment ordered abroad to savings in a foreign account. Paying for any of them out of reais now costs 3.5% in IOF.

Here’s how IOF adds up on a single $5,000 invoice, depending on how the money moves:

Classified as a service export: $0
Received as an unspecified transfer: $19
Converted to reais, then sent to the contractor’s own account abroad: $175

The contractor in the third case also pays a second FX spread when converting reais back to dollars.

Is IOF Charged on Stablecoins?

Stablecoins are digital tokens pegged one-to-one to a fiat currency, often the US dollar; USDT and USDC are the largest. Because they move money on blockchains instead of through correspondent banks, they typically settle in minutes, and they’ve become a popular way for Brazilians to buy and hold dollars. Brazil’s central bank estimates stablecoins make up 90% to 95% of the crypto Brazilians buy from abroad.

At the time of writing, stablecoin conversions aren’t subject to IOF taxes. Since February 2, 2026, however, Brazil’s central bank has classified stablecoin purchases, sales, and international transfers as foreign exchange operations, the same category IOF already taxes.

The government has tried to act on the new classification. The Receita Federal drafted a decree setting a 3.5% IOF on crypto purchases, with an exemption for individuals buying up to R$10,000 a month, before the Finance Ministry suspended the public consultation. No decree had been published as of early October.

Three more central bank rules affect stablecoin payments in and out of Brazil:

October 1, 2026: Licensed international payment providers can no longer settle transfers in stablecoins.
November 3, 2026: Institutions begin monthly reporting of FX operations involving virtual assets.
January 1, 2027: Crypto transfers above $10,000 to foreign providers or self-custodied wallets can be held for up to 24 hours.

Slash lets companies send and receive USDC and USDT across 15 blockchains, so they can pay suppliers or accept payments from clients in stablecoins and move those funds into dollars in their Slash account.⁴

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How to Reduce IOF and FX Costs on Payments to Brazil

IOF is charged when reais and dollars change hands, so most of the savings come from converting less often and classifying each conversion correctly.

Classify Payments as Service Exports

Service exports carry a zero IOF rate, but only when the paperwork reflects it. Contractors who invoice through a registered company and have the FX contract coded as an export of services qualify. Companies can help by paying from a business account with a clear invoice reference, so the receiving institution has what it needs to classify the payment correctly.

Convert Fewer Times

Every conversion from reais back to dollars costs 3.5% in IOF tax plus an FX spread. A contractor who converts a full paycheck into reais after it arrives and then turns around and purchases a software subscription in dollars pays the tax on money that only passed through. One strategy for contractors is to convert just the amount needed for expenses in reais, however that can be difficult to manage. Having the option to hold USD in an operations account can be a better solution, which we explain below.

Hold Dollars You'll Spend in Dollars

Contractors with regular expenses in dollars can keep part of their pay in USD and cover those costs without converting. One rule to factor in: Brazil’s tax authorities treat export revenue that’s kept abroad and brought into Brazil after the export is complete as subject to 0.38%, not zero. However, for contractors with ongoing dollar expenses, a 0.38% charge on later conversions is still well below the 3.5% outbound rate.

Use Pix for Transactions in Reais

Pix is Brazil’s real-time payment network, built and run by the country’s central bank. It’s the most-used payment method in Brazil and has outpaced credit and debit cards in number of transactions since 2022. Pix payments settle in seconds, without the correspondent fees and multiday settlement of an international wire. Pix doesn’t change the IOF rate, which still depends on how the FX contract is classified. For a US company, paying over Pix lets contractors receive reais in the same account they use for everything else, with no conversion or international transfer to manage on their end.

Don't Build a Plan Around Stablecoins Alone

Stablecoin conversions aren’t subject to IOF today, but their treatment is still being decided. The central bank issued several new rules on stablecoins in 2026, and a 3.5% IOF on them remains under discussion. A payment setup that depends on today’s treatment could cost more later on.

Simplify Cross-Border Payments Between the US and Brazil With Slash

A payment to Brazil usually starts in dollars and ends in reais, and Slash has an account for each end.

For US businesses,Slash supports outbound local rails in five different regions, including Brazil, so eligible users can:

Pay Brazilian contractors over Pix from their Slash business account. Deliver reais in a familiar payment method, usually within seconds, instead of waiting on an international wire.
Send SWIFT wires to more than 180 countries for contractors and vendors outside Slash’s local rail network.
Send and receive stablecoins natively, with USDC and USDT supported across 15 blockchains.
Invoice clients and accept card payments on Slash invoices, subject to eligibility.
Set multi-step approval rules so payments to contractors get the right sign-off before they go out.
Sync payments to your accounting software, including QuickBooks Online, Xero, Sage Intacct, NetSuite, and DualEntry.

For Brazilian businesses that earn from US clients, the Slash Global Account is a separate USD operations account available in more than 130 countries with no US entity required to get started. Balances are held in dollars as USDC, and the account also sends and receives Pix for payments in reais.

Holding revenue in dollars can change how IOF fits into your company’s FX planning. A business that keeps foreign-client revenue in dollars can pay a US supplier from the same balance, with no conversion from reais in between. IOF applies when reais and dollars change hands, so the 3.5% outbound rate comes into play when a company moves money out of a Brazilian account to fund the balance.

Knowing where each conversion happens in a payment, and what it costs today, makes the next change easier to plan for. Get started with Slash today to get more control over how your business moves money between dollars and reais.