Government confirms that there will be no additional cut in Income Tax this year

IMF report confirms that there will be no new extraordinary cut in Income Tax in 2026.

After, in 2024 and 2025, Portuguese taxpayers benefited from an extraordinary reduction in IRS withholding tax for one month, it is now certain that this measure will not be repeated in 2026.

According to the , the most recent report from the International Monetary Fund (IMF) confirms that the Government does not foresee a new additional cut to the IRS this year.

In a section of the document that summarizes the responses of the Portuguese authorities to technicians from the IMF mission in Lisbon, it is said that “the government’s commitment to budget balance implies that a future reduction in the IRS is dependent on the available fiscal spaceas demonstrated this year, when the Government decided not to reduce IRS rates to prioritize storm-related support.”

The extraordinary IRS cuts applied in 2024 and 2025 were accompanied by the granting of a bonuses for pensioners. Together, these measures contributed to boosting the economy at the end of those years, through increased family consumption.

However, the possibility of repeating an additional IRS cut in 2026 ended up being ruled out due to the budgetary impact of storms that hit Portugal in February, forcing the Government to channel resources into support measures.

Regarding the possible granting of a new bonus to retirees this year, the IMF report does not make any reference.

In relation to 2027, the government keeps open the possibility of moving forward with a new reduction in the IRS, which could be included in the State Budget proposal to be presented to the Assembly of the Republic in October.

“We are committed to continuing to lower the IRS. We will see how the economy and public accounts evolve in the coming months and then we will make decisions”, said the Minister of State and Finance, Joaquim Miranda Sarmento.