The Council of Ministers announced that a newly approved proposal aims to provide further tax relief by additionally reducing marginal rates across all brackets up to the eighth bracket.
The government’s proposal involves a decrease 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 brackets.
The Council of Ministers emphasized the government’s intention to “align as closely as possible the withheld tax amount with the amount due at the end.”
“Thus, new withholding tax tables will be approved to reflect the reduction of IRS rates, with retroactive effect from January,” the statement reads.
Prime Minister Luís Montenegro announced the measure in an interview with RTP this evening.
Montenegro also stated that the proposal would be submitted “today to the Assembly of the Republic so it can be discussed as early as next week.”
The Prime Minister highlighted that this would be the third IRS reduction under his leadership and promised to “continue doing so during the legislature.”
According to the Council of Ministers’ statement, this IRS reduction across all brackets, except the highest, allows for “increased disposable income beyond what was already included in the State Budget for 2025, benefiting all families, especially those in the middle class.”
The government also highlighted that, with the additional reduction, lower brackets and middle-class families would experience “even more significant tax relief compared to what was planned for 2024.”
