The government’s proposal to reduce the Personal Income Tax (IRS) is scheduled to be discussed in the National Assembly this week, and if approved, it could apply to those earning up to 6,297 euros, based on calculations by DECO PROTeste.
The consumer protection organization notes that the measure “includes a reduction in marginal rates up to the 8th bracket, which means for incomes up to 83,696 euros.”
The bill was submitted to Parliament last week and proposes an additional IRS reduction of 500 million euros for this year 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.
What will the IRS rates be with this reduction?
According to DECO PROTeste, these will be the IRS rates applied once the government’s announced IRS reduction takes effect:
IRS reduction still needs to be approved by Parliament© Reprodução do site da DECO PROTeste
Last week, Parliament approved the government’s request for urgency in considering the government’s IRS proposal, with only the PCP abstaining.
The general discussion and vote on the government’s bill, which amends the Personal Income Tax Code, is scheduled for next Friday, July 4.
The weekly newspaper Expresso reported that the government aims to have the 500 million euro reduction take effect by the beginning of August.
The government is set to expedite the promised IRS reduction to take effect by early August. The goal is to boost summer consumption and mitigate the economic slowdown.
Notícias ao Minuto com Lusa | 08:36 – 27/06/2025
IRS reduction allows “some relief” in family budgets
DECO PROTeste believes the reduction in IRS rates is “good news for the middle and lower classes, but especially for the middle class,” allowing “some relief” that “will make a difference” in families’ monthly budgets.
In an interview with the Lusa agency, legal and tax affairs specialist Magda Canas, however, pointed out that with the adjustment in withholding tax tables, “taxpayers will advance less money to the state in their monthly deductions,” making it “very likely that they will receive less in 2026.”
“During this year’s IRS return period, many taxpayers were surprised because they had to pay more IRS than expected or did not receive the refunds they were used to for extra expenses,” notes Deco Proteste.
According to the explanation, “this happened because they withheld less tax throughout 2024,” and “the same could occur in 2025, impacting refunds or additional payments in 2026.”
Deco Proteste’s specialist specifies that “the government estimates that savings could range from 34 euros to over 400 euros per year, depending on the income level, giving the example of a couple with two salaries of 1,500 euros per month, who could save around 165 euros compared to what was projected at the beginning of this year.”
