A proposal for an amendment was presented jointly by the social-democratic and centrist benches on July 8th and was voted on this afternoon in the Committee on Budget, Finance and Public Administration, where it received favorable votes from the two proponents and Chega.
The PS and IL abstained. Livre voted against. The committee also includes representatives from PCP, BE, and PAN, but their members were not present. The vote took place concurrently with a plenary session of the Assembly of the Republic.
The provision crafted by PSD and CDS-PP ensures that “within the scope of the State Budget for 2026, the Government proposes an additional reduction of 0.3 percentage points in the marginal rates from the 2nd to the 5th bracket.”
This commitment aligns with a bill that Chega presented in parliament, which was ultimately withdrawn from a general vote after PSD committed to reducing the rates further next year for those income brackets.
This initiative was voted on immediately before the Government’s bill regarding the 2025 IRS, which was also approved. In that case, in addition to PSD, CDS-PP, and Chega, IL also voted in favor, while PS abstained and Livre voted against.
During the specialized debate, PS deputy Miguel Costa Matos accused PSD of violating the “no means no” rule to Chega, referring to the expression that Luís Montenegro, as PSD leader before becoming prime minister, used in September 2023 to exclude Chega from any “political governance agreement.”
The deputy described the Government’s initiative as “manifestly regressive” and considered the commitment with Chega a “breach in the pledge of no means no.”
In response to the criticism, PSD deputy Hugo Carneiro defended the government’s supporting benches’ initiative, stating that the executive would continue reducing rates, particularly to consider the “middle class.”
“We will continue to reduce the IRS for all workers,” he said.
CDS-PP deputy João Almeida also defended the Government’s stance, stating the need for a “simplification of the IRS.”
For this year, with the IRS reduction now approved in detail, the IRS rates drop from the 1st to the 8th income bracket.
The relief applies to earnings by taxpayers this year. According to the Government’s initiative, the first bracket rate drops from 13% to 12.5%, the second from 16.5% to 16%, the third from 22% to 21.5%, the fourth from 25% to 24.4%, the fifth from the current 32% to 31.4%, the sixth from 35.5% to 34.9%, the seventh from 43.5% to 43.1%, and finally, the eighth from 45% to 44.6%. The rate for the top income tier remains at 48%.
The cut will also be felt by those in the 9th tier, due to the rule of progressivity in tax calculation.
The Government estimates that the reduction will result in a tax relief of approximately 500 million euros.
