The decision was announced by the plenary board of the Assembly of the Republic as deputies prepared to vote on this initiative and another from the Chega party, which was also withdrawn, proposing increased tax deductions for housing expenses in the IRS.
The withdrawal occurred after PSD parliamentary leader Hugo Soares stated during the debate on the Government’s 2025 IRS reduction proposal that the social-democratic bench was open to including a provision in the 2026 State Budget (OE2026) that would accommodate Chega’s proposal.
Chega’s initiative suggested more substantial IRS rate reductions from the second to the fifth income bracket than what the Government’s already approved proposal envisioned.
In the final moments of the debate, Chega leader André Ventura announced that their bench was willing to support the executive’s initiative if it committed to “a 0.3 percentage point reduction from the 2nd to the 5th bracket,” as stated in his party’s initiative.
In response, Hugo Soares left open the possibility of including such a provision in the OE, leading Chega to withdraw its project from the vote.
The Government’s proposal was approved generally with votes in favor from PSD, CDS-PP, Chega, IL, PAN, and JPP, while PS abstained. BE, Livre, and PCP voted against.
Chega’s initiative already anticipated that the more pronounced reduction would only proceed in 2026, as the bill stipulated it would only come into effect “after the publication of the subsequent State Budget” following the approval of the project.
For the second income bracket, Chega proposed an IRS rate reduction to 15.7%, for the third a cut to 21.2%, for the fourth a decrease to 24.1%, and for the fifth a reduction to 31.1%.
