The calculations performed by the consultancy for Lusa compare the IRS applicable to salaries and pensions in 2025 and the IRS that will be in effect in 2026 according to the draft state Budget for 2026 (OE2026) submitted today in parliament by the government.
“In 2026, there will be a general IRS reduction compared to 2025, and consequently, an increase in net income,” states Joana Garrido from PwC’s tax team, explaining that the reduction covers all brackets and results from the set of measures outlined, not just the decrease in rates in four income brackets (from the 2nd to the 5th).
The simulations consider three measures: the update of 3.51% in the amounts defining the income brackets, the reduction of rates in the 2nd to 5th brackets by 0.3 percentage points from the current rates, and the increase in the subsistence minimum (the mechanism ensuring full tax exemption for those receiving the minimum wage and a partial reduction for those earning just above that level).
The rate for the 2nd bracket drops from 16% to 15.7%, the 3rd from 21.5% to 21.2%, the 4th from 24.4% to 24.1%, and the 5th from 31.4% to 31.1%.
The simulations show the impact of these changes across different brackets, assuming a static scenario where there are no salary increases, i.e., assuming the 2026 salary remains the same as this year.
An unmarried worker without children who currently receives a gross salary of 920 euros per month pays 315 euros in taxes (IRS for 2025). Next year, as the salary will correspond to the 2026 minimum wage and the IRS exemption will extend to this salary band, this taxpayer will not pay IRS next year, resulting in a net gain of those 315 euros annually.
In the same situation, a worker earning 980 euros (1st IRS bracket) will also experience a tax reduction of 315 euros. Instead of paying 693 euros, they’ll pay 378 euros. Although the IRS rate in the 1st bracket remains unchanged at 12.5%, this taxpayer also benefits from the increase in the subsistence minimum and the update of the value defining that 1st income bracket.
An unmarried worker without children earning 1,100 euros gross per month (2nd bracket) will benefit from an annual tax reduction of 145 euros (instead of paying 1,218 euros, they will pay 1,073 euros).
In another example, a couple with two children, where each earns a gross salary of 1,300 euros per month (3rd bracket), will see a tax reduction of 99 euros (instead of 2,005 euros, they will pay 1,906 euros). For an unmarried person without children, with an identical salary, the reduction is 50 euros (IRS decreases from 1,753 to 1,703 euros).
With a salary of 1,800 euros (4th bracket), the improvement in income for an unmarried worker without children is 88 euros (IRS decreases from 3,359 to 3,271 euros). The reduction is 176 euros for a couple with two children in this same salary scenario (with a tax decrease from 5,219 to 5,043 euros).
For a couple with two children in the 5th bracket, where each receives a gross monthly salary of 2,250 euros, the combined IRS reduction is 324 euros (IRS goes from 8,956 to 8,632 euros). For an unmarried taxpayer without children in the same salary bracket, the reduction is 162 euros (tax decreases from 5,228 to 5,066 euros).
For an unmarried taxpayer earning 3,000 euros monthly (6th bracket), the net increase will be 204 euros (IRS decreases from 8,790 to 8,586 euros). For a couple with two children, where each member earns 3,000 euros, the total reduction is 408 euros (the combined IRS of the two decreases from 16,079 to 15,671 euros).
In the case of a 3,500 euros salary (7th bracket) for an unmarried taxpayer, the relief will be 323 euros (IRS drops from 11,126 to 10,803 euros).
An unmarried taxpayer without children earning 4,500 euros gross (8th bracket) will experience an IRS reduction of 347 euros (instead of paying 16,663 euros annually, they will pay 16,316 euros).
If the salary is 7,500 euros gross (9th bracket), in the same personal and family situation, the IRS decreases by 447 euros (tax recedes from 34,002 to 33,555 euros annually).
