The Portuguese Government anticipates a loss of 401 million euros in IRS revenue in the 2027 assessment, resulting from the annual update of the specific deduction and tax brackets applied to 2026 income. This value is inscribed in the Invariant Policies Framework (QPI) of the State Budget for 2027, sent by the Ministry of Finance to Parliament, and does not correspond to a new fiscal policy measure, but rather to the effect of rules already legislated in Laws No. 32/2024 and 34/2024.
The specific deduction, the amount that is deducted from the gross income of workers and pensioners before the calculation of IRS, went from 4,462.15 euros to 4,587.09 euros in 2026, an increase of 124.94 euros corresponding to the update of the Social Support Indexer. Parallel to this, the IRS brackets were updated by 3.51%, with the first bracket rising from 8,059 euros to 8,342 euros and the last tier before the maximum marginal rate of 48% going from 83,696 euros to 86,634 euros.
The Minister of Finance, Joaquim Miranda Sarmento, maintains the commitment to reduce IRS by 2,000 million euros by the end of the legislative term, with a trajectory of approximately 500 million euros per year between 2027 and 2029. However, a new cut in marginal rates in 2027 is no longer guaranteed, depending on the evolution of the economy and public accounts. The QPI does not separate the impact of each component of the 401 million, presenting them in a single line item.
The article also notes that, in addition to the 401 million, the QPI contemplates an additional loss of 209 million euros from the reduction of taxation on moderate rents, partially offset by a gain of 668 million euros from the increase in salaries and pensions. Overall, the QPI points to a pressure of 4,783 million euros on the budgetary balance. The 2027 State Budget should be delivered by October 10, a date that may be brought forward or delayed to the following Monday.
