The government’s new program, presented at the Assembly of the Republic, returns to reduce the IRS at the center of tax priorities. According to the Sapo, the executive led by Luís Montenegro confirms the intention to reduce the IRS to the 8th level, predicting a cut of two billion euros by 2029.
The first step of this reduction is scheduled for 2025, the year the state budget already includes a fiscal relief of 500 million euros.
In addition to the IRS, a gradual decrease in IRC is also foreseen, until it reaches a rate of 17% at the end of the legislature, explains the same source.
Budgetary sustainability in focus
In the government program, the executive stresses that the reduction of IRS will be accompanied by a policy of budget sustainability.
According to, the goal is to rationalize the currently scattered tax benefits, thus expanding the tax base and ensuring margin for the descent of taxes without compromising the public balance.
Projections for public accounts
Institutions such as Banco de Portugal and the Public Finance Council already anticipate a possible return to budget deficits.
According to Banco de Portugal, the deficit may be 0.1% of gross domestic product this year, increasing to 1.3% in 2025. The Public Finance Council, in turn, points to a balanced balance by 2025 and a 1% deficit the following year.
The European Commission projects an surplus of 0.1% this year, but a 0.6% deficit reversal in 2026. The government maintains, however, a more optimistic forecast, anticipating a 0.3% excess of GDP, according to the state budget for 2025.
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A reform with economic impact
Fiscal reform must have an effect on accelerating economic growth. However, it admits that this impact should not be overvalued for the sake of prudence.
According to ECO, budgetary balance and reduction of public debt are presented as essential conditions for sustainable economic and social development.
Complementary measures
To reinforce sustainability, the government proposes to review and rationalize tax benefits, concentrating support and eliminating redundances.
This measure aims to reinforce the revenue base without resorting to general tax increases, adds the same source.
Scheduled Parliamentary Discussion
The XXV Constitutional Government program, resulting from the May 18 elections won by the AD coalition (PSD/CDS), was delivered by the Minister of Parliamentary Affairs, Carlos Abreu Amorim.
According to the above source, the document was approved by the Council of Ministers and will be debated at the Assembly of the Republic this week.
A bet on fiscal trust
The Executive reiterates that it intends to create predictability for families and companies, betting on a simpler tax system with fewer exceptions.
Thus, IRS and IRC renovation emerges as one of the pillars of stability for the coming years, in a context of international uncertainty, Eco refers.
In the end, the government reaffirms the commitment to maintain the balance of public accounts as a guarantee to support the measures now announced.
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