Lisbon, Sept. 17, 2026 (Lusa) - Portugal's prime minister confirmed on Thursday, in a statement to the nation, that the cabinet has approved a draft bill to reduce income tax rates for the 1st to 6th tax brackets by between 0.3 and 0.5 percentage points.

As Luís Montenegro began addressing the nation from the official residence in São Bento (Lisbon), the government published the new rates set out in the bill to be submitted to parliament on its website.

The rate for the 1st bracket falls by 0.3 percentage points and, for the 2nd to 5th brackets, by 0.5 percentage points, whilst the 6th bracket sees a reduction of 0.3 percentage points.

The rate for the 1st bracket falls from 12.50% to 12.20%.

The rate for the second bracket falls from the current 15.70 per cent to 15.20 per cent.

The rate for the third bracket falls from 21.20% to 20.20%.

In the fourth bracket, the rate falls from 24.10% to 23.60%.

The rate for the fifth income bracket falls from 31.10% to 30.60%.

In the sixth bracket, the rate falls from 34.90% to 34.60%.

In the subsequent brackets, the rates remain unchanged: 43.10% in the seventh, 44.60% in the eighth and 48.00% in the ninth.

In his address to the nation, Montenegro focused on the tax relief, highlighting that it is aimed in particular at «middle-class households» and that it will already be reflected in November's wages and the Christmas bonus.

The new reduction marks the fifth cut in personal income tax (IRS) during the PSD and CDS-PP governments, he said.

For an income tax reduction to take effect, parliament must approve it; as this is a government initiative, it requires tabling a draft bill before parliament.

The tax relief, which Montenegro said would have an impact of €400 million, will be felt by taxpayers across all income brackets.

PCT/ADB // ADB.

Lusa