Direct taxes (1,055 million euros) are expected to grow 3.7% and indirect taxes (1,773 million euros) 4.9% next year and compared to 2025.
Tax revenue is expected to increase by 4.4% in 2026, to 67,065 million euros, driven by both direct taxes (+3.7%) and indirect taxes (+4.9), according to the State Budget proposal for 2026 (OE2026).
“It is expected that tax revenue, in 2026, will reflect a growth corresponding to 2,828 million euros (4.4%) compared to the estimated revenue for 2025, amounting to 67,065 million euros”, reads the report accompanying the proposal, delivered to parliament today.
This increase is due to the increase in both direct taxes (1,055 million euros) and indirect taxes (1,773 million euros), which are expected to grow by 3.7% and 4.9%, respectively, compared to 2025.
Nos direct taxesthe Government predicts that in 2026 tax revenue from Income Tax Income of Individuals (IRS) increase by 5.0% compared to the estimated execution for 2025, to 19,496 million euros, plus 937 million euros.
This estimated growth in IRS revenue, despite the reduction in marginal rates, results mainly from the forecast of “favorable developments in the labor market, both for employment and for remuneration per worker”, he explains.
With regard to the Tax on Corporate Income (IRC)the executive expects tax revenue to fall by 2.0% (199 million euros) in 2026 compared to the estimated execution for 2025, to 9,532 million euros, reflecting a drop of one percentage point in the rate applied.
Still in direct taxes, it provides that revenue from Extraordinary Contribution on the Energy Sector (CESE), Additional to IMI (AIMI), Contribution on the Banking Sector (CSB) more than tripled (+259.6%), to 439 million euros, despite the end of the Solidarity Supplement for the Banking Sector (ASSB), declared unconstitutional.
With regard to the indirect taxesthe revenue from Value Added Tax (VAT) it should grow 5.1% in 2026 compared to the estimated execution for 2025, amounting to 27,489 million euros, reflecting the growth in nominal private consumption.
Nos Special Consumption Taxes (IEC), revenue from the Tax on Petroleum and Energy Products (ISP) is expected to increase by 4.6% (187 million euros) to 4,254 million, given the expected growth in private consumption.
I and revenue from the Tobacco Tax (IT) is expected to grow by 71 million euros (+4.4% to 1,676 million) and revenue from the Tax on Alcohol and Alcoholic Beverages (IABA) by eight million euros (+2.5% to 317 million), following the trend observed in 2025.
The Government is also counting on the growth of private consumption to boost government revenue. Vehicle tax (ISV), which is expected to rise by 22 million euros (+4.6%) to 511 million in 2026, as well as revenue from the Single Circulation Tax (IUC), which is expected to grow by 32 million (+5.7%) to 602 million euros.
As for Stamp Tax (IS), revenue is estimated to rise by 126 million euros (+5.4%) to 2,458 million euros.
In the remaining indirect taxes – Extraordinary Contribution on the Pharmaceutical Industry (CEIF), Extraordinary Contribution on Suppliers of the Medical Device Industry of the National Health Service (CEFID) and Contribution for Audiovisual (CAV) — the expected revenue is 291 million euros, 0.8% more compared to the estimated execution for 2025.
The Government delivered OE2026 to parliament today, on the eve of the deadline and three days before Sunday’s local elections.
In the macroeconomic scenario, the PSD/CDS-PP Government predicts that the Gross Domestic Product (GDP) will grow 2% this year and 2.3% in 2026.
The executive intends to achieve surpluses of 0.3% of GDP in 2025 and 0.1% in 2026. As for the debt ratio, it estimates a reduction to 90.2% of GDP in 2025 and 87.8% in 2026.
The proposal will be discussed and voted on in general between October 27th and 28th. The final global vote is scheduled for November 27th, after the specialty debate process.
