This year, most Portuguese citizens are set to experience relief from their Personal Income Tax (IRS), as per the Government’s proposal, which could mean savings of over 400 euros in certain cases.
The Council of Ministers approved on Wednesday the draft law for an additional IRS reduction totaling 500 million euros, set to be implemented later this year, a measure now submitted to Parliament.
Following this decision, the Ministry of Finance released a series of simulations indicating that savings could exceed 400 euros annually compared to the current tax brackets in place under the State Budget for 2025.
Calculations by the authorities show that savings start at 34 euros per year for an individual earning 1,000 euros without children, but can exceed 400 euros (precisely 414 euros) for a couple where both earn 3,000 euros, as illustrated in the table below:
Alívio no IRS poderá ser superior a 400 euros© Ministério das Finanças
Additionally, it’s noteworthy that the measure includes retroactive adjustments to January this year, meaning that Portuguese taxpayers will receive refunds at the end of the year for excess tax withheld in months leading up to the implementation of the new tables.
To better understand the impact of the IRS relief on salaries, the Notícias ao Minuto article will have detailed simulations issued by the office of Finance Minister Joaquim Miranda Sarmento:
The Government has announced an IRS reduction, aimed at coming into effect in September, with retroactive adjustments from January. Check out here the Ministry of Finance’s simulations for the new IRS rates to be applied in 2025.
Beatriz Vasconcelos | 08:06 – 26/06/2025
In a statement released on Wednesday, the Council of Ministers highlighted that the approved proposal “allows for a new reduction in the tax burden, further reducing marginal rates across all brackets, up to the 8th bracket”.
The Government’s proposal outlines decreases in IRS rates by 0.5 percentage points between the first and third brackets, 0.6 percentage points between the fourth and sixth, and 0.4 percentage points in the seventh and eighth.
The Council of Ministers also emphasized that the Government aims “to align as closely as possible the withheld tax with the amount due at year-end,”.
“Thus, new withholding tables will be approved to reflect the IRS rate cuts, retroactively effective from January,” it stated.
The Council of Ministers today approved the draft law for an additional IRS reduction amounting to 500 million euros, scheduled for implementation this year, a measure now pending in Parliament.
Lusa | 23:52 – 25/06/2025
