Englobamento — Income Aggregation Election

Englobamento is the election by which a taxpayer chooses to include income that would otherwise be taxed at a flat autonomous rate (typically Category E or Category F) into their aggregated IRS return, subject to progressive brackets instead. This election can be advantageous when the taxpayer's marginal progressive rate is lower than 28% — for example, a low-income taxpayer in the 14.5% or 23% bracket. However, once the election is made, all income of that category must be aggregated (you cannot cherry-pick). The decision should be modeled carefully each year. Englobamento applies per income category — you can elect it for Category E (investment) without electing it for Category F (rental), and vice versa.