The government has approved and detailed the upcoming IRS tax reduction, aiming for implementation in August, a month earlier than initially planned. The objective is to boost summer consumption and mitigate the economic slowdown.
The proposed IRS reduction, yet to be approved by the Assembly of the Republic, has been fast-tracked for a quick vote to encourage summer spending, fearing a GDP slowdown. Additionally, efforts are being made to provide financial relief to families due to a decrease in refund values, reportedly down by about 600 million euros this year.
Notícias ao Minuto is seeking clarification from the Ministry of Finance on the matter.
The Council of Ministers has approved a bill for an additional IRS tax cut of 500 million euros, to be enacted this year, and it is now in Parliament.
According to a statement from the Council of Ministers, the approved proposal allows further tax relief by reducing marginal tax rates across all brackets up to the eighth bracket.
The government’s proposal suggests IRS rate cuts of 0.5 percentage points for the first to third brackets, 0.6 points for the fourth to sixth, and 0.4 points for the seventh and eighth.
The note also emphasized aligning withheld tax with the actual tax owed at the year’s end.
“New withholding tables reflecting the IRS rate cuts, retroactive to January, will be approved,” the statement read.
The measure was announced by Prime Minister Luís Montenegro in an RTP interview. Montenegro stated that the proposal would be submitted to the Assembly “today [Wednesday] for discussion next week.”
The Prime Minister pointed out this marks the third IRS reduction under his leadership, pledging to maintain this effort throughout the term.
The Council of Ministers noted that the IRS reduction across all brackets, except the highest, boosts disposable income beyond what was in the 2025 State Budget, benefiting all families, particularly the middle class.
The government emphasized that with this additional reduction, lower brackets and middle-class families will experience “even more significant tax relief compared to what was planned for 2024.”
