Trade and Industry Minister Fernando Pimentel announced the tax incentive program that runs from 2013 to 2017 during a news conference on Thursday.
He says the program will benefit manufacturers of light gasoline-fueled cars that get 40 miles per gallon (17 kilometers per liter) and ethanol-fueled vehicles that get 28 gallons per gallon (12 kilometers per liter).
Next year, all cars made in Brazil must have air bags and ABS brakes. Pimentel says that automakers that provide even more security measures such as stability control will be entitled to tax incentives.
Brazil is the world's seventh-largest motor vehicle producer.