The Government’s initiative plans a reduction in IRS amounting to 500 million euros, applicable to the income earned by taxpayers throughout this year.
The Socialist Party (PS) will abstain, according to a socialist source. This stance facilitates the approval of the Government’s proposal.
Following the first meeting of the parliamentary group under his leadership, the Socialist Secretary-General, José Luís Carneiro, stated when asked about potential amendments at the specialty stage, that a decision will be made at an “appropriate moment,” leaving the possibility “open for discussion in the specialty stage.”
The legislative proposal from the Government includes a reduction in rates from the first to the eighth bracket, with no alteration to the rate of the new top tier in the IRS table.
According to the executive’s proposal, the rate for the first bracket decreases from 13% to 12.5%, the second from 16.5% to 16%, the third from 22% to 21.5%, the fourth from 25% to 24.4%, the fifth from 32% to 31.4%, the sixth from 35.5% to 34.9%, the seventh from 43.5% to 43.1%, and the eighth from 45% to 44.6%. The top income bracket rate remains at 48%.
Although there is no change in the last bracket, the IRS reduction affects all taxpayers due to the table’s progressivity rule. The decline in previous brackets ensures that those in the new tier also benefit from the relief.
Today’s plenary session will also discuss and vote on four other opposition party bills for altering the IRS table.
Chega proposes a sharper reduction of rates from the second to the fifth bracket, maintaining the Government’s proposed rates for the first, sixth, seventh, eighth, and ninth brackets, with effects slated for 2026.
PSD parliamentary leader, Hugo Soares, announced on Thursday that the party has yet to decide on Chega’s proposed IRS reductions due to the lack of understanding about its fiscal impact.
Meanwhile, the PAN suggests a more significant reduction than the Government’s up until the sixth bracket and a smaller relief in the seventh income level, with the eighth and ninth brackets remaining unchanged.
The PCP proposes a similar reduction for the first bracket as the Government, a sharper cut in the second, and maintaining current rates from the third to the eighth bracket. Additionally, they advocate for the removal of the solidarity surcharge applied to incomes over 80,000 euros and, in turn, propose raising the final bracket’s IRS rate from 48% to 53.5%, along with establishing a tenth bracket at a rate of 56%.
The Liberal Initiative (IL) tables a proposal for just two brackets, one with a 15% rate on taxable income and another with a 28% rate. Simultaneously, the reformulation includes an initial IRS exemption for the first tranche of income up to 12,180 euros (equivalent to 14 times the national minimum wage).
Beyond measures focused on the general tax table, other proposed amendments to the IRS Code submitted by Chega, Livre, BE, and PAN concerning deductions will also be voted on.
