For many Portuguese, September can bring good news on the salary sheet. The government announced a cut in the tax on the income of singular persons (IRS), to be felt later this year, and promised progressive tax relief throughout the legislature. The proposal has already been approved by the Council of Ministers and is now awaiting green light from Parliament.
The measure is registered in the government program and aims to alleviate the fiscal charges mainly in the middle class, with direct impact on the monthly retention and accounts of many workers.
Progressive reduction throughout the legislature
According to the document delivered to the Assembly of the Republic, the executive commites to reduce the IRS by two billion euros by 2028. Of these, 500 million should be applied in 2025, scheduled to start in September, through extraordinary descent of retention at source.
According to Finance Minister Joaquim Miranda Sarmento, the goal is to replicate what was done in 2024: new tables with lower rates in the final months of the year, compensating for the extra values between January and August.
Who will benefit from the measure?
The descent applies to the eighth level of IRS, which means that taxpayers with annual collectible income up to 83,696 euros will benefit from the reduction. Only the ninth echelon is left out, which includes the highest income.
In practice, it is a relief for the large majority of workers due to others and independent. The ECO, citing a supervisor, estimates that the largest beneficiaries will be taxpayers with monthly gross wages between 3,500 and 7,000 euros, especially single -free singles, which accumulate an advantage at two levels: by the drop of rates at higher levels and the lower load at lower levels, where progressivity is also applied.
Updated IRS tables for 2025
The new normal and medium rates are already in the tables published in the Diário da República. For example:
- Up to 8,059 €: exempt (rate 0%)
- From 8,059 € to 12,160 €: average rate of 14.18%
- From € 28,400 to 41,629 €: average rate of 25.835%
- From 44,987 € to 83,696 €: average rate of 35.408%
Taxpayers with income exceeding 83,696 euros continue to be subject to the normal rate of 48%, without changes announced in this cut.
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When does it come into force?
The proposal will be approved by the Council of Ministers and then goes to Parliament. If voted on within the expected deadlines, the new tables may come into force in September, as happened in 2024.
Miranda Sarmento has publicly admitted that this is the government’s intention, estimating the direct impact on the taxpayers’ payroll still during the second half of the year.
A relief with budgetary impact
The government faces this cut as part of a policy of “performance replacement” and not as a cross reduction.
The measure is seen as a relevant political step, at a time when the executive seeks to balance budget commitments to the promise of relieving the fiscal burden without compromising European goals.
Still, the full application of the plan depends on parliamentary approval, which, in the light of the current composition of the Assembly, is dependent on negotiations and eventual cedences between benches.
What can change?
The IRS cut is designed to be in force throughout the legislature, but the format may evolve with future state budget proposals.
The intention of the executive is to introduce more changes in the Portuguese fiscal system, especially the tax neutrality and the widening of benefits to families with children.
Until then, taxpayers should be aware of the new retention tables from September and verify their framing in updated levels, to more accurately realize the impact of tax relief on monthly income.
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