In Portugal, it is common for retirees to believe that they are automatically exempt from IRS. However, the so-called “minimum existence”, provided for in article 70 of the IRS Code, does not always guarantee this exemption. Since the reform introduced in 2023, the mechanism started to function as a rebate applied before tax calculation, and not as a total exclusion.
This means that, even with low income, a pensioner may have to pay IRS if tax deductions are reduced. The detail is in the expenses recorded and how they affect the final calculation.
How the “existence minimum” works
According to the current regime, the reference value for 2025 is the highest between 12,180 euros (corresponding to 14 months of minimum wage of 870 euros) and 1.5 times the annualized IAS, which is equivalent to 10,972.50 euros. Therefore, the applicable limit is 12,180 euros.
When the annual income approaches this value, the deduction no longer guarantees automatic exemption. If the taxpayer has few deductions, for example, no health, rent or household expenses, the calculation may result in a residual collection.
According to explanations shared by tax experts, General Family Expenses (DGF), which represent 35% of eligible expenses up to a limit of 250 euros per taxpayer (or 335 euros in the case of single-parent households), have an important weight in the final result. If the deductions are lower than the tax calculated, there will be a difference to pay.
A practical example
A retiree with an annual pension of 12,180 euros and few registered expenses, just enough to generate a 90-euro deduction, may have to pay between 150 and 250 euros in IRS. A taxpayer with deductions close to the maximum limit tends to cancel this collection.
On the other hand, anyone who receives 12,000 euros per year (slightly below the reference value) and has some expenses will hardly have tax to pay. The impact always depends on the volume of deductions validated in the e-Fatura.
How to avoid surprises
The main recommendation is to validate all expenses, such as health, housing, rent and general expenses, and confirm that mandatory contributions are reflected in the declaration. It is also advisable to use the official simulators before submitting the IRS, to understand whether there will be residual collection.
Another useful strategy is to evaluate joint delivery, in the case of couples. In some cases, this option allows you to balance income and maximize deductions.
There is not always exemption
The “existence minimum” exists to ensure that no one has net income below a level considered worthy, but it is not a total exemption. When deductions are scarce, tax may arise: even for those receiving modest pensions.
In short, many retirees who thought they were free from the IRS may have to pay after all. It all depends on one small detail: the number of expenses that the tax authorities recognize as deductible.
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