Brazil’s richest 0.1% increased their share of national income to a record 13.1% in 2024, according to analysis of tax returns, highlighting the limits of President Luiz Inácio Lula da Silva’s efforts to reduce inequality.
The findings offer a counterpoint to Lula’s argument that falling inequality, stronger employment and expanded social programmes have ensured that economic gains are reaching poorer Brazilians as he prepares to seek re-election in October.
Researcher Sergio Gobetti’s estimates show that the share of income held by the wealthiest 0.1% rose from 10.2% in 2020. The figures are based on detailed income-tax declarations, which capture investment returns more fully than household surveys used to calculate the Gini coefficient.
Brazil recorded its lowest Gini coefficient in 2024, while wages, employment and government support improved conditions for people at the bottom of the income distribution. But the tax data indicate that gains from financial investments have flowed disproportionately to the country’s wealthiest households.
High interest rates boost Brazil’s richest households
High interest rates have been central to the shift. Brazil’s central bank raised the benchmark Selic rate from a record low of 2% to 12.25% between 2020 and 2024, seeking to contain post-pandemic inflation and cool economic activity.
Because roughly half of Brazil’s public debt is linked to the Selic, higher borrowing costs translate into larger interest payments for investors. Wealthier households, which hold a greater share of financial assets and government bonds, are therefore better placed to benefit from the policy.
Tax collected on earnings from investment funds and other fixed-income assets rose by 325% between 2020 and 2024, reaching 92.1 billion reais, or about £14.3 billion. Brazil’s federal revenue service said the increase was mainly driven by the higher Selic rate.
Financial income, particularly returns from fixed-income investments, accounted for almost one-third of the increase in the richest 0.1%’s share of income during the period, according to Gobetti’s estimates.
Otaviano Canuto, a former World Bank vice-president, said targeted government benefits could have a positive social impact but warned that rising public debt was contributing to pressure on interest rates and borrowing costs.
“The arithmetic of public debt is unforgiving,” Mr Canuto said.
Marcelo Medeiros, an economics professor at the University of Illinois Urbana-Champaign, said household surveys generally captured wages more effectively than investment gains, which were more comprehensively reported in tax data.
“Brazilian inequality is driven primarily by the inequality that exists among the rich and between the rich and everyone else,” Mr Medeiros said.
Brazil’s gross public debt has risen by more than 10 percentage points of economic output since Lula took office, reaching 82.5%. The Treasury expects the proportion of government securities tied to floating rates to reach as much as 53% this year.
Tax data for 2025 are not yet available to measure the concentration of income at the very top. However, tax receipts from investment funds and other fixed-income assets rose by a further 25% in the latest year, outpacing growth in revenue from labour-income taxes.
The central bank’s policy rate stood at 14% in August after a period of easing. Economists expect it to remain high, suggesting that financial income will continue to provide an important source of gains for Brazil’s wealthiest households.
