New package against the cost of living in Portugal: IRS drops, retirees receive an additional payment of up to 200 euros

The Portuguese government has approved new economic measures to counter the pressure created by rising living costs and especially fuel prices. Package; It covers different areas, from reducing IRS rates to a one-time additional payment to low- and middle-income retirees, from support to sectors heavily affected by fuel to the expansion of Passe Ferroviário Verde.

However, not all of the announced measures come into force at the same time. While some can be implemented directly by government decision, some regulations, such as the IRS amendment, must go through the legislative process.

IRS to be reduced on first six income brackets

At the Council of Ministers meeting on September 17, the bill to reduce IRS rates in the first six income brackets was approved.

According to the model announced by the government, the rate in the first income bracket is 0.3 points; 0.5 points between the second and fifth quintiles; In the sixth tranche, it will be reduced by 0.3 points.

The change is expected to be applied to incomes earned in 2026 and will directly affect approximately 2.9 million households.

The government plans to reflect the impact of the regulation on salaries in the withholding tax tables starting from November.

Additional payment of 100-200 euros to retirees in December

One of the parts of the package that will be directly implemented is a one-time payment for low- and middle-income retirees.

200 euros for those whose monthly retirement income is up to 537.13 euros, 150 euros for those whose monthly retirement income is between 537.13 and 1,074.26 euros. Those whose income is between 1,074.26 and 1,611.39 euros will be paid 100 euros.

The payment is planned to be made automatically and in one lump sum in December 2026.

38 million euros to sectors affected by fuel

The government also announced support totaling 38 million euros for sectors particularly affected by rising fuel costs.

30 million euros of this is allocated to the freight transportation and roadside assistance sector, and 5 million euros to road public transportation.

The remaining 3 million euros will be directed to taxis, fire departments and social solidarity institutions.

Support amounts per vehicle vary depending on the field of activity and vehicle type.

Passe Ferroviário Verde is expanding

The Council of Ministers also approved the extension of the monthly 20-euro Passe Ferroviário Verde to include urban rail services in Lisboa and Porto.

This change will significantly expand the scope of the card.

However, the critical point for passengers is this: just because the decision has been announced does not mean that the new coverage is immediately available on all lines. The operational start date and usage details of the application need to be followed from the announcements of the relevant transportation companies.

Temporary reduction in fuel tax is extended to the end of the year

The government also accepted the bill to extend the temporary ISP tax reduction on gasoline and diesel until December 31, 2026.

Prime Minister Luis Montenegro defended the announced package as a balance between social support and sustainability of public finances.

Different evaluations came from political parties and some sector representatives regarding the adequacy of the measures.

PTNewsHub note

In particular, it is necessary to distinguish between the statements "the rate has been reduced" and "the new rates have definitely come into force" in the IRS regulation. The Council of Ministers approved a bill; The final legislation phase should not be considered finished until the parliamentary process is completed.

Resources

Portuguese Government — Conselho de Ministros, 17 September 2026

official statement

Portuguese Government — Income and fuel subsidies

Official details

ECO — September 17, 2026

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