IRS Tax Brackets 2026

The 2026 rate cut approved on 9 October

On 17 September 2026 the Government approved a bill to cut the rates of the first six brackets for income earned in 2026. Parliament passed it on 9 October in a single sitting, in the vote in principle, the detailed vote and the final vote (PSD, CH, IL, CDS-PP and JPP for, PCP against, PS, L and BE abstaining), and sent it for promulgation on 12 October. It is an authorisation law: the new table only enters the IRS Code when the Government publishes the decree-law, whose draft is annexed to the bill. Bracket limits stay the same.

Rates and average rates from the draft decree-law annexed to Proposta de Lei 108/XVII; the parcela a abater is ours, by the same rule as above. The bill states that «the reduction applies to income earned in 2026, taking effect from 1 January».

What it is worth, on the table tax of a single filer: €33.32 less with €10,000 of taxable income (€1,269.74 instead of €1,303.06), €108.38 less with €25,000 (€4,573.85 instead of €4,682.23) and €171.83 less with €50,000. Higher brackets gain too, because their first euros pass through the cheaper brackets.

IRS brackets 2027: the State Budget proposal

The 2027 State Budget bill (Proposta de Lei 110/XVII, submitted on 8 October 2026) keeps the reduced rates above and raises every limit by about 3.9%: the 1st bracket goes up to €8,666 and the 9th starts above €89,995. The solidarity surcharge would start at €89,995, the limit of the last bracket, instead of €80,000, and the minimum-subsistence reference value would rise to €13,580. Not approved yet: the vote in principle is scheduled for 28 October and the final overall vote for 24 November 2026; if passed, it applies from 1 January 2027.

Proposal, not law: art. 60 of Proposta de Lei 110/XVII (OE2027), as submitted. The parcela a abater is ours. The specific deduction stays at 8.54 × IAS, so its 2027 amount depends on the IAS set in December 2026.

How the brackets work: only the top slice pays the top rate

IRS is progressive by slices. With €25,000 of taxable income you are in the 5th bracket (31.1%), but the 31.1% only hits the €1,911 above €23,089. The law does the sum in two parts (art. 68(2)): the previous bracket’s limit times that bracket’s average rate (€23,089 × 17.705% = €4,087.91) plus the excess times your bracket’s rate (€1,911 × 31.1% = €594.32). Total €4,682.23, an average rate of 18.73%. The parcela a abater gives the same: 25,000 × 31.1% − 3,092.77 = €4,682.23.

Single filer, 2026 table in force. The coleta is the tax before tax credits (dependants, general expenses, health, education, housing) and before the withholding already paid.

Marginal rate and average rate: which one is yours

The marginal rate is the rate of the bracket where your last euro sits: it says how much IRS each extra euro pays, such as a raise, a bonus or rent. The average rate is the table tax divided by taxable income: it says how much IRS weighs on the whole. With €50,000 the marginal rate is 44.6% and the average rate 27.72%. Moving up a bracket does not raise the tax on what you already earned: a raise from €23,089 to €23,589 pays 31.1% only on the new €500 (€155.50).

From gross salary to taxable income

The table does not apply to gross pay. First comes the specific deduction: for employment income, €4,587.09 in 2026 (8.54 × the IAS of €537.13, art. 25), or the compulsory Segurança Social contributions if they are higher. With the usual 11%, that happens above €41,700.82 of gross pay a year. Pensions get the same €4,587.09, capped at the pension itself (art. 53). For low incomes the minimum-subsistence allowance comes next. What remains, added across categories, is the taxable income (art. 22).

• Gross salary of €30,000 a year (14 × €2,142.86): 30,000 − 4,587.09 = €25,412.91 of taxable income, 5th bracket, table tax €4,810.64.
• Gross salary of €50,000: the contributions (€5,500) become the deduction, leaving €44,500 of taxable income, 7th bracket, table tax €11,436.23.
• Interest and dividends pay a flat 28% (art. 71) and only enter the brackets if you opt to aggregate them. Non-residents do not use this table: salaries and pensions earned in Portugal pay 25% as a rule (art. 71, AT leaflet).

Minimum subsistence in 2026: €12,880

The reference value is the higher of €12,880 and 1.5 × 14 × IAS (€11,279.73), so €12,880, which is 14 times the €920 minimum wage (art. 70, as worded by Lei 73-A/2025). For people who live mainly on a salary or a pension, it works as an allowance per earner that lowers taxable income. At €12,880 gross: 12,880 − 4,587.09 of specific deduction − 6,292.91 of allowance = €2,000 taxable, a table tax of €250 that the general household expenses credit (up to €250) can wipe out.

The allowance shrinks as income rises. Between €12,880 and €14,641.67 gross, each extra euro adds €3.60 to taxable income, because the allowance drops by €2.60; the table tax rises 45 cents per euro (3.6 × 12.5%). Between €14,641.67 and €15,910.25 each euro adds €2.35, about 37 cents of tax. Above €15,910.25 a single employee gets no allowance. The two thresholds are our calculation from the art. 70 formula; the AT publishes the simplified formulas for 2026 in the first quarter of 2027. The allowance does not apply when gross income passes €16,543.60 per taxpayer (2.2 × 14 × IAS).

Married couples and de facto partners: the table applies to half

Under joint filing, the couple’s taxable income is divided by two, the table is applied to that half and the result is multiplied by two (art. 69). A couple’s bracket is therefore the bracket of half its income. Joint filing pays off when incomes are unequal: with €40,000 and €10,000 of taxable income, filing separately costs €9,750.06 + €1,303.06 = €11,053.12; filing jointly, half of €50,000 is €25,000 and the tax is 2 × €4,682.23 = €9,364.46, €1,688.66 less. With equal incomes the table gives the same result either way.

Brackets are not the withholding tables

The art. 68 brackets work out the tax for the whole year, in the return filed from 1 April to 30 June of the following year (art. 60). The withholding tables are something else: they set what your employer or Segurança Social deducts each month as an advance on that tax. In 2026 they are the tables of Despacho 233-A/2026, with monthly amounts and their own deductible amounts. Searches for «tabela IRS 2026» mostly return these: the withholding calculator applies them to your salary.

In the annual assessment the AT works out the year’s tax (table tax minus credits) and compares it with what was withheld: the difference is your refund or bill. The IRS refund simulator does that settlement with deductions, and the IRS calculator turns gross pay into net pay.

IRS Jovem and the brackets

Up to age 35, IRS Jovem exempts part of employment and self-employment income (categories A and B) for 10 years: 100% in the 1st year, 75% in the 2nd to 4th, 50% in the 5th to 7th and 25% in the 8th to 10th, capped at 55 × IAS a year (€29,542.15 in 2026). The exempt part pays no tax but still counts to set the rate on the rest (art. 12-B(4) and art. 22(4)), so it can keep you in a higher bracket. The IRS Jovem simulator works out the saving.

Madeira and the Azores: rates 30% lower

The brackets are the same, the rates are not. In Madeira, the 2026 table is in art. 18 of Decreto Legislativo Regional 8/2025/M, effective 1 January 2026: 8.75% in the 1st bracket and 33.6% in the last.

The Azores have no separate table: the national rates in force each year are cut by 30% (art. 4 of DLR 2/99/A, as worded by DLR 15-A/2021/A). Applied to the 2026 table, that gives the same normal rates as Madeira, from 8.75% to 33.6%. The solidarity surcharge is 1.75% and 3.5% in the Azores and 2.5% and 5% in Madeira, as on the mainland (AT leaflet). The simulator above uses the mainland table.

IRS brackets in 2024, 2025 and 2026

Each column is the art. 68 table in force at the end of that year. Limits rose about 4.6% from 2024 to 2025 and about 3.5% from 2025 to 2026; rates fell in brackets 1 to 8 in 2025 and in brackets 2 to 5 in 2026.

2024: Lei 33/2024 (August 2024), which replaced the Lei 82/2023 table. 2025: Lei 55-A/2025 (July 2025), which replaced the Lei 45-A/2024 table. 2026: Lei 73-A/2025. Source: art. 68 and its earlier wordings on the Portal das Finanças.