The new withholding tax tables have been published on the Finance Portal, reflecting the changes announced by the government, which will take effect next month. In August and September, rates will be exceptionally lower due to the retroactive effects of the measure, compensating for deductions made since January of this year.
0% Withholding Rate in August and September
For workers earning up to 1,136 euros gross at the end of the month, the withholding rate will be 0%—meaning there will be no IRS deduction in August or September. This applies to single workers (with or without children) and married workers whose spouse also has income.
Withholding rate in August and September for single workers (with or without children), and married workers whose spouse also has income© Portal das Finanças
For married workers whose spouse has no income, the exemption threshold is lower, covering only salaries up to 1,081 euros gross.
Withholding rate in August and September for married workers with a spouse without income© Portal das Finanças
Employers must apply the new rates to August salaries, as the regulation takes effect on the first day of the month. However, if they are unable to do so, they may “proceed with corrections in withholdings in subsequent months,” up to December, as outlined by the government in the released ordinance.
Companies and other employers must apply the new withholding tables to August salaries, but if they are unable to do so, they can adjust the amounts later, until the end of the year.
Lusa | 18:30 – 22/07/2025
Deductions Adjusted in October
In the last three months of the year, taxpayers will withhold according to the new IRS tables. The rates will be higher than those in August and September (which experienced retroactive effects), but lower than the current ones. The first eight brackets of the IRS tables will see rate reductions between 0.4 and 0.6 percentage points.
The 0% rate is only applied to the minimum wage, as has been the case, which currently stands at 870 euros gross.
For instance, a worker earning 1,000 euros gross was withholding 58 euros per month for IRS. From October, the withholding amount will be 56 euros—two euros less than under the current tables.
In other brackets, for instance, up to 2,078 euros monthly for single individuals, the deduction reduction will be four euros—changing from 314 to 310 euros per month. The same applies to married individuals, up to 2,200 euros, who will now withhold 214.89 euros instead of the 218.43 euros per month.
And For Pensions?
For pensions, the retroactive effects will also be noticeable in August and September.
In the next two months, there will be no IRS withholding on pensions up to 1,116 euros gross per month (if the pensioner is single or married to someone who also has income) or up to 1,152 euros (if the pensioner is married and the only one earning income).
Withholding rate in August and September for non-married pensioners or married pensioners with an income-earning spouse© Portal das Finanças
Withholding rate in August and September for married pensioners with a non-earning spouse© Portal das Finanças
From October, similar to what happens with salaries, the retroactive effects cease and the new rates are applied.
For pensions, the reductions in deductions will be more significant.
For non-married individuals up to 1,116 euros, the reduction in monthly deductions will be 14 euros: from 128 euros to 114 euros per month.
The decrease will be half for married pensioners with children and a pension income of up to 1,152 euros. They will withhold 97.90 euros, seven euros less than the previous months when they withheld 101.20 euros.
Adjustments in 2026
With a lower IRS rate, workers and pensioners will receive a larger portion of their salary, especially in August and September, due to the retroactive effects of the measure—which means more money at the end of the month, but also a smaller refund or a larger adjustment in 2026.
Tax consultant and Ilya founder, Luís Leon, in an interview with Jornal de Notícias, cites a salary of 1,136 euros, which will not be subject to deductions in August and September. “Under normal retention tables, this person should have a monthly reduction of three euros. This would result in 42 euros less withholding per year. But to compensate for this amount, only up to July, the government, instead of giving 42 euros, is giving 180 euros.” These are 138 euros more, in those two months, which, when filing the IRS, the state will request back.
The same occurred last year when adjustments were made. The specialist points out that in 2024 the adjustment absorbed “a large part of refunds or even resulted in taxes payable in the next year’s filing’.
Luís Leon advises saving the extra money received in August and September and “seeing what happens when submitting the IRS declaration next year.”
This possibility is not only foreseen by industry specialists— the government itself admits that adjustments might be larger due to the retroactive effect of the measure.
In an interview with Lusa, the Secretary of State for Fiscal Affairs, Cláudia Reis Duarte, states: “The tax decreases for everyone. Everyone is paying less tax. What might happen is that the final adjustment, which is only made in this case in 2026, may not correspond exactly to previous years because of adjustments in withholdings. But that’s good: it means people have their money in their pocket earlier, through withholding adjustments.”
Tables Set to Change Again in 2026
Following these changes, the withholding tables are expected to change again in January 2026.
The State Budget (OE) for the following year will bring an additional IRS reduction, because the new law binds the government to include an extra reduction of 0.3 percentage points from the 2nd to the 5th brackets, which should necessitate another adjustment in monthly withholding.
Regardless of this change, the IRS Code already requires parliament to update the values defining the annual brackets based on the variation of the GDP deflator, which impacts the monthly tables.
