A debate was sparked in the Assembly of the Republic regarding the newly introduced tax tables, which allegedly point to significant reductions in tax withholdings. The Socialist Party (PS) has publicly demanded clarification from the Finance Minister on potential lower reimbursements or additional tax payments that taxpayers might face in 2026 due to these changes.
Simulations conducted by PwC indicate that the new tables will generally reduce reimbursements or increase tax obligations for taxpayers during the 2026 tax adjustment. Based on these calculations, the PS is seeking confirmation on whether the new withholding tables will, on average, lead to increased or decreased tax adjustments and if more people will be affected compared to the 2024 IRS settlements.
The PS highlighted a previous incident in 2024, when a mid-year IRS reduction led to an “excessive reduction” of monthly deductions, creating the perception of a significant tax cut before the 2025 budget proposal. They believe the government is repeating this strategy ahead of local elections.
The Finance Ministry has approved two withholding tables: one for August and September, featuring particularly lower rates to offset higher deductions from January to July, and another for October through December, which features lower rates than currently applied but is higher than those for August and September.
For August and September, some taxpayers will have a 0% withholding, while others will pay less than 10 euros, in contrast to regular month values exceeding 100 euros. The PS argues that the retroactive tax reduction correction, covering January to July, could have been spread over five months between August and December, rather than being concentrated in the two months prior to elections. They seek to understand the budgetary impact of this decision and its effect on taxpayers both immediately and in the future.
The PS requests from Joaquim Miranda Sarmento details on “the effective budgetary impact” of applying the tables at each of the two intervals. They inquire about the estimated impact on 2026 IRS reimbursements and how it influences the projected budget balance for that year.
Further, they question whether there is a technical basis for the disparity between the announced budget impact of the withholding tables and what was communicated by the government. Should there be documentation supporting this, the PS urges for its provision to the Assembly of the Republic.
Additionally, the PS questions the government’s decision to once more confine the adjustments for pre-reduction IRS discounts within two months rather than distributing them over the remaining five months of the year. They challenge the government on whether they will forewarn taxpayers about possible future IRS adjustments at final tax settlement.
Last week, when the new tables were released, Secretary of State for Tax Affairs, Cláudia Reis Duarte, assured that the course towards aligning monthly tax collection with the final IRS remains unchanged. She stated that while the final adjustment in 2026 might not match previous years due to withholding adjustments, it ultimately benefits taxpayers by allowing earlier access to their funds.
