How much will the new IRS discount bring in Portugal? Government simulations announced

The Portuguese government has approved a bill that will reduce IRS rates again for the first six income brackets. If the plan completes the legislative process and comes into force, it will affect approximately 2.9 million households and will be implemented on 2026 incomes.

Under the proposal, the rate in the first IRS bracket would be reduced by 0.3 percentage points, rates in the second through fifth brackets would be reduced by 0.5 percentage points, and the rate in the sixth bracket would be reduced by 0.3 percentage points.

No direct changes are foreseen in the normal rates of the seventh, eighth and ninth brackets.

However, due to the progressive structure of the IRS, taxpayers in higher income brackets can also indirectly benefit from the discount through the income sections passing through the lower brackets.

Approximately 12 euros on a 1,000 euro salary, 100 euros on a 2,000 euro salary

In the simulations published by the government, the annual additional tax advantage of an employee who lives in mainland Portugal, has no children, and declares taxes alone varies depending on the gross salary.

For a monthly gross wage of 1,000 euros, the annual additional advantage is calculated as approximately 12.10 euros.

An annual additional advantage of 65.32 euros is calculated for a gross salary of 1,500 euros, 100.44 euros for 2,000 euros, 133.28 euros for 2,500 euros, and 171.50 euros for a gross monthly income of 3,500 euros.

These are sample scenarios. Actual tax consequences may vary depending on an individual's marital status, number of children, income types, deductions and other tax characteristics.

The results are different for couples with children

with two children and In households where both spouses are employed, the result varies depending on income distribution.

In the government's sample calculation, the new discount does not create an additional advantage in cases where each spouse earns 1,000 euros gross per month and files a joint return; because the IRS calculated under the current 2026 rules is already zero.

In the example where one spouse earns 1,500 euros gross and the other earns 1,300 euros gross, the annual additional advantage is 116.64 euros.

In the sample household with two salaries of 2,500 and 1,500 euros, 200.88 euros; 292.62 euros for incomes of 3,700 and 2,000 euros; In the example where there are two salaries of 5,000 and 3,000 euros, an annual additional advantage of 343.66 euros is calculated.

Tax rates are not finalized yet

The most important legal distinction here is this: The Council of Ministers approved the legislative proposal regarding the regulation. The proposal will be submitted to Assembleia da República.

For this reason, the announced rates should not be considered as new IRS rates that have been finalized before the legislative process is completed.

The government plans for the regulation to have an impact on revenues in 2026.

IRS taxpayers also need to note that a “tax rate reduction,” a “retenção na fonte” of monthly wages, and an annual IRS settlement are not the same thing. Therefore, the amount reflected in the monthly net salary and the final annual tax benefit may be different.

Resources

Portuguese Government, 17 September 2026

https://portugal.gov.pt/gc25/comunicacao/noticias/novas-taxas-de-irs-consulte-as-simulacoes-e-saiba-quanto-pode-poupar

ECO, 18 September 2026

https://eco.sapo.pt/2026/09/18/ha-quem-poupe-171-euros-ao-ano-com-novas-taxas-de-irs-veja-as-simulacoes/

idealista/news, 18 September 2026

https://www.idealista.pt/news/financas/economia/2026/09/18/77709-taxas-de-irs-descem-entre-0-3-e-0-5-pontos-ate-ao-6o-escalao-as-simulacoes