Lisbon, Sept. 18, 2026 (Lusa) - The government's proposed reduction in personal income tax (IRS) will result in additional annual savings of €12.10 on a gross salary of €1,000 and €100.44 on a salary of €2,000, according to the government's simulations.

Information published on the government portal while the prime minister addressed the nation this evening from the official residence in S. Bento (Lisbon) allows us to gauge the impact of the income tax reduction compared with current rates.

Under the new personal income tax rates, a single, childless employed person living in mainland Portugal and earning a gross monthly income of €1,000 will save a further €12.10 this year.

In the same family situation, a worker with a gross monthly salary of €1,500 will save an additional €65.32 per year.

For a worker earning a gross monthly salary of €2,000, the additional tax relief will be €100.44.

For a gross salary of €2,500, the reduction is €133.28.

For a gross salary of €3,500, the income tax reduction is €171.50.

According to the same simulations, a pensioner who is the sole earner and who receives a gross pension of the same amount will see reductions equal to those estimated by the government for single workers without children.

For a couple with two children, where both parents are employed, the impact differs from that projected for single workers and pensioners, given the household's specific circumstances.

In a scenario where both parents earn €1,000 gross per month and file a joint income tax return, the proposed changes maintain the current tax situation, as the taxpayers already pay no income tax.

For this group, «the income tax liability resulting from the application of the rates set out in the 2026 State Budget was already zero», explains the government in the document published on its website.

For a couple where one earns €1,500 gross per month and the other receives €1,300, the reduction will be €116.64 compared with the current level of taxation.

If one partner earns €2,500 gross and the other earns €1,500, the additional annual relief will be €200.88.

If, however, one partner's gross salary is €3,700 and the other's is €2,000, the additional annual income tax reduction will be €292.62.

Assuming that one partner earns €5,000 and the other €3,000, the reduction compared with the current income tax liability will be €343.66.

The government's simulations assume income tax rates will fall by between 0.3% and 0.5% up to the sixth income bracket, in line with the draft bill the government is set to present to parliament.

The cabinet approved the legislative initiative today at its meeting.

According to information published on the government portal, the rate for the first income bracket falls by 0.3 percentage points; for the second to the fifth brackets, the rates fall by 0.5 p.p., while the sixth bracket falls by 0.3 p.p..

The rate for the first income bracket falls from 12.50% to 12.20%.

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

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 7th, 44.60% in the 8th and 48.00% in the 9th.

Although the rates for the 7th, 8th and 9th brackets remain unchanged, taxpayers in these income bands will also benefit, because income tax is calculated on a progressive basis.

The tax authorities divide a taxpayer's income into brackets and apply the respective rate set out in the table, which the Government is proposing to amend, to each bracket. This means that the new rates for the 1st to 6th brackets will apply to these taxpayers when the tax authorities divide their income into brackets. In the first brackets, from the 1st to the 6th, the new rates will apply, whilst from the 7th to the 9th, the rates that have been in place until now will continue to apply.

In a statement to the nation at the official residence a few hours after the cabinet meeting, with an opportunity for questions from journalists later, the prime minister confirmed that the reduction will be reflected in November's pay-as-you-earn deductions and in the Christmas bonus.

PCT/ADB // ADB.

Lusa