How much does an employee cost in Brazil in 2026? INSS, FGTS, 13th salary and worked examples

Two layers. First, two mandatory payments raise annual pay above twelve salaries: the 13th salary, one month’s pay a year,[4] and the vacation bonus of one third of a month’s pay.[5] Together they add 11.1% to annual pay. Second, the employer’s contributions apply to all of that pay: 20% social security with no ceiling,[1] work-accident insurance, salário-educação[2] and the 8% FGTS deposit.[3]

In our calculation the result is 46.1% of salary with a work-accident rate of 1%, and 48.3% with 3%, before the other third-party contributions that depend on the company’s activity code.

Contributions are due by the 20th of the following month.[1] Two regimes change the picture. A subsidiary owned by another company cannot use the simplified Simples Nacional regime,[8] so a US company’s own entity pays the full rates. Companies in the revenue-based payroll-relief regime, which includes IT services at a 4.5% revenue rate, are being moved back: in 2026 they pay 60% of the revenue rate plus 50% of the 20% payroll rate, in 2027 40% plus 75%, and from 2028 the full payroll contribution.[9][10]

Under the Brazil-US Social Security Agreement, a person employed in Brazil is covered only by Brazilian social security for that work.[11]

Calculated by Nearshorers for a company in the regular regime, with a RAT of 1% and a factor of 1.0, at the Central Bank’s PTAX rate of BRL 5.4212 per dollar on October 30, 2026:[6]

With a RAT of 3%, add 2.2 points of salary. The percentage stays flat because the employer’s contributions have no ceiling; only the employee’s contribution stops at the 2026 ceiling of BRL 8,475.55, so it peaks at BRL 988.09 a month.[12] The examples leave out other third-party contributions, overtime, transport vouchers for commuting employees[13] and any profit sharing, health plan or meal benefit the company offers.

• Dismissal without cause: a fine of 40% of all FGTS deposits[3] plus notice of 30 days, and 3 more per year of service up to 90.[14]
• Overtime and night work: at least 50% extra for overtime, up to 2 hours a day, and 20% for work between 10 p.m. and 5 a.m.[15]
• The 40-hour week: Constitutional Amendment 141 cuts the week to 42 hours from mid-December 2026 and 40 from mid-December 2027 with no pay cut,[16] so the cost per hour of the same salary rises by 10% from 44 to 40 hours (calculated). The 40-hour week page has the details.
• Paternity leave: 10 days from 2027, paid by the employer and reimbursed by social security.[17]

The employee’s social security is progressive in 2026, from 7.5% up to BRL 1,621.00 to 14% on the band up to the ceiling of BRL 8,475.55.[12] Monthly income tax runs from 0% to 27.5%,[18] and since January 2026 it is zero on taxable monthly income up to BRL 5,000, with a reduction that phases out at BRL 7,350.[19] The employer withholds both.[1]

US private employers spent $46.89 per hour worked on employee compensation in June 2026: $32.82 in wages and $14.07 in benefits, which were 30.0% of the total.[20] That is about 43% on top of wages, and legally required benefits were 7.0% of compensation for full-time workers.[20] Brazil’s statutory on-cost alone, 46% to 48% of salary, is higher than the US share for all benefits, on a lower base: the 2026 minimum wage is BRL 1,621 a month, about USD 299.[21][6]

The Brazil hiring guide covers contracts, termination and contractors, and the cost guides for Mexico and Colombia run the same exercise there.