The Portuguese Government announced a new reduction in IRS that should already be felt in November, through a decrease in withholdings at source applied to salaries and Christmas bonuses. The measure was announced by the Prime Minister, Luís Montenegro, during the debate on the motion of censure presented by Chega in the Assembly of the Republic.
The tax reduction applies up to the 6th bracket, with an estimated impact of around 400 million euros. Although the announced decrease applies up to the 6th bracket, the Executive guarantees that, due to the progressivity of IRS, the effect should benefit all taxpayers, including those in higher brackets.
The tax relief will be achieved through a lower withholding, meaning a smaller portion of income is preemptively delivered to the State, increasing the net amount received by workers. The Government also indicated that the change will produce retroactive effects to January 2026.
The decisions will be finalized at the next Council of Ministers meeting, when more details about the application of the tax reduction should be known. The measure should cover more than two million households, and for many workers, November will be the first month when this change can be directly visible in the net amount received.
