There are measures such as those included in the housing package and the reduction in corporate tax discussed outside the scope of the State Budget for 2026 (OE2026), with the government aiming for a simpler document, free of “budget riders,” that can be approved by parliament.
The second budget prepared by the finance team led by Joaquim Miranda Sarmento, whose proposal has already been approved by the Council of Ministers, will be submitted a day before the deadline and debated broadly at the end of the month, with the final vote scheduled for November 27.
Here is what is already known about OE2026:
CSI will increase by 40 euros
The budget will include a new increase of the Elderly Solidarity Supplement (CSI) by 40 euros, as announced by the Prime Minister, who also promised to give the supplement for lower pensions in case of budget room.
“When we came to the Government, it was approximately 550 euros, we first increased it to 600, then to 630, and by October 10, the country will know how much we propose to increase next year,” stated Luís Montenegro, referring to the deadline for submitting OE2026 during a campaign event for local elections.
The Prime Minister has already advanced that the increase will be 40 euros, setting it at 670 euros.
The Head of Government also committed to a new supplement for lower pensions “if, midway through the year, the budget execution shows balance and sufficient room.”
The budget already includes measures with an impact of 4,449 million euros
The budget already includes a set of measures impacting public accounts, totaling 4,449 million euros, according to the government document submitted to the Committee on the Budget, Finances, and Public Administration (COFAP).
Among the revenue-impacting measures, notable is the reduction of corporate tax by one percentage point, with an impact of 300 million euros, as well as the update of the specific deduction, IRS brackets, and minimum subsistence amount, totaling 325 million.
On the expenditure side, noteworthy items include personnel expenses (1,248 million euros), the increase determined in the income agreement (512 million), and salary agreements (262 million), as well as pensions (1,563 million euros).
Finance expects a surplus this year and next
The government expects to achieve a budget surplus of 0.3% of Gross Domestic Product (GDP) this year, and although new forecasts for 2026 have yet to be presented, a positive balance is still expected with the last projections estimating a surplus of 0.1% in 2026, according to the report submitted to Brussels in April.
The Public Finance Council (CFP) continues to project a budget deficit for next year, but now reduced to 0.6% of GDP, according to its report, and the Bank of Portugal also points to a negative budget balance in 2026.
Regarding the macroeconomic scenario, in the State Budget, the government had embedded a growth of 2.1% for this year, revised to 2.4% in the report submitted to Brussels in April, and it is still uncertain if this estimate will be maintained.
Government reduces IRS rates
Parliament approved in July a reduction in IRS for 2025 and a commitment to a further reduction next year, to be included in OE2026.
The approved bill includes a provision added to the government’s initial proposal by the PSD and CDS-PP benches, requiring that “in the context of the State Budget for 2026,” the government proposes to parliament “an additional reduction of 0.3 percentage points in the marginal rates from the 2nd to the 5th bracket.”
With this initiative, the executive was committed by the Assembly of the Republic to move forward with a new proposal to reformulate the IRS table, to establish a new reduction in the rates from the 2nd to the 5th bracket, to apply to income earned by taxpayers throughout 2026.
With an additional reduction of 0.3 percentage points, the second bracket would have a rate of 15.7%, the third 21.2%, the fourth 24.1%, and the fifth 31.1%.
Luís Montenegro already confirmed, meanwhile, in a campaign that the next budget will bring a new IRS reduction. “We are reducing IRS, we have done it three times already. And we will do it in the next State Budget as well,” he assured at a rally supporting the PSD/CDS-PP candidate for the Guimarães City Hall presidency, Ricardo Araújo.
The second budget prepared by the finance team led by Joaquim Miranda Sarmento, whose proposal has already been approved by the Council of Ministers, will be broadly discussed at the end of the month, with the final global vote scheduled for November 27. Here are some of the measures.
Science will have an 8% budget increase
The Minister of Education, Science and Innovation announced that the budget would have an 8% increase for the science sector, representing an increase of 40 million euros compared to this year.
During his intervention at the commemorative session of the 50th anniversary of the University of Minho’s School of Engineering, Fernando Alexandre revealed that science will have an 8% increase, which translates to an additional 40 million euros.
National Minimum Wage increases to at least 920 euros
The tripartite agreement on salary valuation and economic growth for 2025–2028, signed last October between the government, the four business confederations, and the General Union of Workers, anticipated that the national minimum wage would increase from the current 870 euros to 920 euros in 2026.
In the government program, the executive set a new goal for the entire legislature, aiming for the guaranteed minimum wage to reach 1,100 euros gross per month by 2029.
The Minister of Labor, Solidarity and Social Security declared that the government “neither opens nor closes the door” to review the national minimum wage trajectory.
IRC reduction apart from OE2026
The reduction in corporate tax was already approved in parliament on a general basis on September 19, before the start of the budget debate. Although the discussion takes place separately, the budgetary impact of the measure enters OE2026.
Following a corporate tax reduction this year from 21% to 20%, the rate will decrease to 19% next year. For 2026, there is also a reduction in the rate applicable to small and medium-sized enterprises (SMEs) and small and medium capitalization companies on the first 50,000 euros of taxable income from 16% to 15%.
Schedule
The State Budget had to be submitted to parliament by October 10, but the government anticipated it for today — and the schedule for the consideration of OE2026 drawn up by the parliamentary committee responsible for the budget indicates that the general discussion will take place on October 27 and 28.
The voting on amendment proposals and the document, clause by clause, should start on November 20, with the final global vote on November 27.
