The new tax measures foreseen in the State Budget for 2026 promise to give some breathing space to Portuguese wallets. The Government proposes a reduction in IRS rates in 2026 between the 2nd and 5th brackets, in addition to an update of income limits and an increase in the minimum wage, which exempts those receiving the national minimum wage from tax, which will allow them to ‘save’. According to Notícias ao Minuto, calculations by financial consultant PwC show that, even with small reductions in rates, the impact will be felt across all income brackets.
A transverse relief, albeit uneven
According to the publication, IRS rates will fall by 0.3 percentage points between the 2nd and 5th brackets. In practice, the rate for the 2nd bracket goes from 16% to 15.7%, that of the 3rd from 21.5% to 21.2%, that of the 4th from 24.4% to 24.1% and that of the 5th from 31.4% to 31.1%. Although the remaining rates remain unchanged, the update of the brackets by 3.51% and the increase in the minimum existence guarantee that all taxpayers will see their net income increase.
PwC, cited by Notícias ao Minuto, compared the tax due in 2025 with that expected for 2026. The simulations consider a static scenario, without salary increases, and allow us to understand how much each taxpayer will be able to save next year.
Who gets what with the new IRS
A single, childless worker with a gross monthly salary of 920 euros, corresponding to the new national minimum wage, will no longer pay IRS, which represents an annual saving of 315 euros. Those who receive 980 euros, also in the first bracket, will see the tax drop from 693 euros to 378 euros.
In the 2nd bracket, a taxpayer with 1,100 euros gross per month will pay 1,073 euros in 2026, 145 euros less than this year. A couple with two children and 1,300 euros in gross salary each (3rd bracket) will see the IRS drop by 99 euros in total, while a single person with the same income will save 50 euros.
On income of 1,800 euros per month (4th bracket), a single worker without children will see the tax drop from 3,359 to 3,271 euros, that is, 88 euros less. In the case of a couple with two children, the savings double: 176 euros per year, with the IRS falling from 5,219 to 5,043 euros.
In the 5th step, for a couple with two children and 2,250 euros gross each, the relief will be 324 euros in total. A single taxpayer with the same salary will see their tax reduced by 162 euros, from 5,228 to 5,066 euros per year.
Higher ranks also save
Although rates do not change in the upper brackets, updates to income values and the minimum existence have a positive impact. According to Notícias ao Minuto, a single taxpayer with 3,000 euros per month (6th bracket) will pay 204 euros less in IRS, while a couple with two children and the same joint income will see their tax drop by 408 euros.
Anyone earning 3,500 euros (7th step) will notice a drop of 323 euros, and a worker earning 4,500 euros (8th step) will save 347 euros. At the top of the table, a taxpayer with 7,500 euros gross per month (9th bracket) will see their IRS fall by 447 euros, going from 34,002 to 33,555 euros per year.
A symbolic but widespread relief
In total, the changes represent transversal tax relief, with a greater impact on low and intermediate incomes. The Government argues that this policy follows the principle of “relieving the IRS burden progressively”, while consultants warn that the effect could be diluted by inflation and the increase in the cost of living.
Even so, as highlighted by , the updating of the levels and the reinforcement of the minimum existence guarantee that all taxpayers will have some net gain, albeit modest.
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