The number that matters is R$ 3.24 trillion: that is how much Brazil's federal government expects to collect in 2026, an all-time high. The simplest way to grasp it: of every 100 reais of wealth produced in the country this year, 23.70 reais should go to federal coffers. On average, that works out to about 270 billion reais flowing in every month.

If confirmed, the 23.7% of GDP mark (GDP is the total value of goods and services produced in a year) would be the highest in the National Treasury's historical series, which began in 1997, according to news site G1. The previous record dates from 2010, the final year of President Lula's second term, at 23.6% of GDP, while the average between 1997 and 2025 was 21.4%. The estimate appears in the 2027 budget bill sent to Congress this week, which projects a slight drop to 23.4% of GDP next year (R$ 3.46 trillion) and a primary surplus, meaning accounts in the black before interest payments on debt, of R$ 18.6 billion.

What counts as revenue

In short: total revenue covers federal taxes and other income, such as oil royalties, concessions and dividends from state-controlled companies, and excludes states and municipalities. It should not be confused with Brazil's overall tax burden, which adds state and city taxes and reached 32.1% of GDP in 2024, according to the federal tax authority.

Part of the explanation lies in the string of tax increases approved under Lula's third term: the IOF levy on loans and currency transactions, taxes on offshore wealth, the gradual return of payroll taxes, import duties on more than a thousand products and taxation of sports betting, among other measures listed in the budget. "The reversal of the deterioration of the federal revenue base has been a major challenge, although some progress can already be detected," the document says. In exchange, the government widened income tax exemption for those earning up to 5,000 reais a month, a change that takes effect with the 2027 tax return.

Oil is also helping set the record. The government expects to collect R$ 172.1 billion from oil production in 2026, about 33 billion reais more than the R$ 139.3 billion of 2025, driven by higher global barrel prices amid the war in the Middle East, according to G1. All of this with a slower economy: GDP grew 0.5% in the second quarter, below the 1.1% recorded from January to March.

Record revenue, red ink

For Rafaela Vitória, chief economist at Banco Inter, taxes and oil are sustaining collection even as activity loses steam. She cautions, however, that the bigger inflow still does not balance the books. A primary deficit means the government spends more than it collects, before counting interest on its debt.

The government has a strong rise in revenue this year and will still generate a primary deficit of close to 0.5% of GDP, a result that should be worse than in 2025.

Rafael Barros Barbosa, a researcher at Brazilian think tank FGV IBRE, notes that spending has grown sharply in Lula's third term, boosted by the transition constitutional amendment, which added about R$ 170 billion to annual outlays. According to SpaceMoney, public debt reached 82.5% of GDP in August, its highest level since April 2021. Analysts cited by G1 say the mismatch between spending and revenue is what pressures interest rates and the rise of indebtedness.