How this works
The IRS settlement is a subtraction: the tax due for 2025 minus what you already handed over during the year through withholding. Withheld too much? You get a refund. Too little? You get a bill. This simulator redoes that calculation for category A (employment income), step by step.
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From gross pay to taxable income
Each income holder subtracts the specific deduction: €4,462.15 in 2025 — 8.54 × the €522.50 IAS (Ordinance 6-B/2025/1) — or, if higher, their social-security contributions (11% of gross, which kicks in above roughly €40,565). What remains is the taxable income.
- 2
The gross tax: 2025 brackets and the couple quotient
We apply the nine brackets in force for 2025 (Law 55-A/2025, which cut the rates retroactively to January): 12.5% up to €8,059, rising slice by slice to 48% above €83,696. For jointly-taxed couples, income is halved, run through the table, and the result doubled — the couple quotient.
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The 2025 tax credits
Each dependant deducts €600 — €726 if aged up to 3, €900 from the second dependant onwards when aged up to 6. General family expenses give 35% up to €250 per taxpayer (45% up to €335 for single-parent households); the simulator assumes the cap, reached with ~€715 of e-fatura invoices. Health: 15% up to €1,000. Education: 30% up to €800. Rent on your permanent home: 15% up to €700 in 2025 — or more, up to €1,000, for taxable income below €30,000 (art. 78-E(4)); the base cap is being phased up to €800 (Law 36/2024).
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The brake: the article-78 global cap
The sum of the health, education and rent deductions (among others) has a ceiling that depends on taxable income: no limit up to €8,059; a flat €1,000 above €80,000; and, in between, a formula sliding from €2,500 down to €1,000. For couples the halved income counts; with three or more dependants the ceiling rises 5% per dependant. Dependants and general family expenses sit outside this cap.
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Refund or a bill
The 2025 withholding is subtracted from the assessed tax. If you withheld more than you owe, the tax office refunds the difference — by law, up to 31 August 2026; in practice, usually weeks after filing. If you withheld less, you get a bill, also payable by 31 August.
Frequently asked
When do I get my IRS refund in 2026?
Filed within the deadline (1 April to 30 June 2026)? By law, the tax office has until 31 August 2026 to pay. In practice it is usually faster: in 2026 the first refunds started landing in mid-April, about two weeks after filing opened. The money goes to the IBAN registered on the Portal das Finanças — check it under "Dados Pessoais Relevantes".
Why is my refund smaller than last year?
A refund is not a bonus — it is the return of what you over-withheld. In 2025 the IRS rates were cut (Law 55-A/2025) and the withholding tables were adjusted in the final months of the year, so many people already paid less tax month by month… and have less to get back now. A bigger net salary during the year means a smaller refund the following summer.
Which expenses count towards the deductions?
Those sitting in e-fatura under the household members’ tax numbers: health (appointments, medicines, health insurance), education (tuition, nurseries, school books) and rent on your permanent home under a lease registered with the tax office. The window to validate 2025 invoices closed on 2 March 2026, so the amounts the tax office used are already locked — this simulator is for checking whether the result adds up.
Married: joint or separate taxation?
The simulator models joint taxation (the couple quotient), usually the better deal when the two incomes are uneven. Under separate taxation, each spouse files their own return, the per-household deduction limits are halved, and each deducts their own expenses plus half of the dependants’. If in doubt, the filing flow on the Portal das Finanças simulates both scenarios before you submit.
I am on IRS Jovem. Does this result apply to me?
Not directly. IRS Jovem exempts part of your income (up to 100% in the first year, capped at 55 × IAS), so your real tax will be lower and the refund larger than simulated here. Use our IRS Jovem simulator — in the related tools — to see the exemption you qualify for.
I earn little and the simulator says I owe tax. Is that right?
You probably will not pay. The IRS code has the "existence minimum" (article 70), which keeps low incomes lightly taxed or untaxed — a complex formula this simulator does not apply. For gross incomes up to roughly €12,000–€14,000, the real tax is often lower than estimated here and the refund larger. The tax office’s assessment note has the final word.
DISCLAIMER
An estimate for orientation, not tax advice. It simulates the category A (employment) IRS settlement on 2025 income, mainland Portugal, with joint taxation for couples and general family expenses at the cap. It excludes the existence minimum, IRS Jovem, the solidarity surcharge, tax benefits (PPR, donations), the invoice-VAT credit, alimony, nursing homes, disability deductions and other income categories. The real number is the one on the tax office’s assessment note — confirm on the Portal das Finanças.