The Prime Minister, Luís Montenegro, announced on Wednesday that the Government’s proposal includes decreases in IRS rates by 0.5% for the first to third brackets, 0.6% for the fourth to sixth brackets, and 0.4% for the seventh and eighth brackets. The reduction will not cover the ninth and last bracket, offering protection to the first three brackets representing lower income levels, and reinforcing the income and remuneration conditions of the Portuguese middle class, highlighted Luís Montenegro during an interview excerpt on RTP, aired in full last night.
Government’s Proposal Details
The Government proposes decreases in IRS rates by 0.5 percentage points for the first to third brackets, 0.6 percentage points for the fourth to sixth, and 0.4 percentage points for the seventh and eighth.
The Council of Ministers emphasized in a statement that the Government aims to align the tax withheld as closely as possible with the amount due at the end. It stated that new withholding tables will be approved, reflecting the IRS rate reduction, with retroactive effect from January.
The Council of Ministers today approved the bill for an additional IRS reduction totaling 500 million euros, to be implemented this year, which has already been submitted to Parliament.
The IRS reduction in all brackets, excluding the highest, allows for increased disposable income, beyond what was included in the 2025 State Budget, benefiting all families, especially the middle class, as stated by the Council of Ministers.
According to the Government, with this additional reduction, the lower brackets and middle-class families will experience a more significant tax relief than initially anticipated for 2024.
Simulations: Impact on Salaries
The Ministry of Finance released a series of simulations based on the new IRS rates for 2025, showing the expected relief for single individuals without dependents, married individuals without dependents, married individuals with dependents, and pensioners.
Simulation for single individuals without dependents © Ministério das Finanças
Simulation for married individuals without dependents © Ministério das Finanças
Simulation for married individuals with two dependents © Ministério das Finanças
Simulation for pensioners without dependents © Ministério das Finanças
The Prime Minister stated that the Government’s proposal should be discussed next week.
The Prime Minister emphasized that this would be the third IRS reduction under his leadership, pledging to continue this trend throughout the legislative term.
Last week, during the Government program discussion, the Prime Minister already announced that the IRS reduction proposal would be presented within the next two weeks.
