In 2026, Portuguese personal income tax (IRS) has 9 brackets with rates from 12.5% to 48%. The 2026 State Budget (Law 73-A/2025) raised all bracket thresholds by 3.51% and cut the rates of brackets 2 to 5 by 0.3 percentage points. The first bracket covers taxable income up to €8,342 (12.5%) and the top rate of 48% applies above €86,634. These brackets apply to 2026 income, declared in the return filed in 2027.
Portugal income tax brackets 2026 — the full table
| Bracket | Taxable income | Rate |
|---|---|---|
| 1st | Up to €8,342 | 12.5% |
| 2nd | €8,342 – €12,587 | 15.7% |
| 3rd | €12,587 – €17,838 | 21.2% |
| 4th | €17,838 – €23,089 | 24.1% |
| 5th | €23,089 – €29,397 | 31.1% |
| 6th | €29,397 – €43,090 | 34.9% |
| 7th | €43,090 – €46,566 | 43.1% |
| 8th | €46,566 – €86,634 | 44.6% |
| 9th | Above €86,634 | 48% |
Two changes versus 2025: thresholds rose 3.51% (the inflation-adjustment mechanism) and rates on brackets 2–5 fell 0.3 percentage points. High earners also pay the solidarity surcharge: 2.5% on income between €80,000 and €250,000 and 5% above that.
How the brackets actually work
Portuguese IRS is progressive by slices: each slice of income is taxed at its own bracket rate. Being "in" the 6th bracket does not mean paying 34.9% on everything — and a pay rise never reduces net income.
Worked example: €20,000 of taxable income
| Slice | Amount | Rate | Tax |
|---|---|---|---|
| 1st bracket | €8,342 | 12.5% | €1,042.75 |
| 2nd bracket | €4,245 | 15.7% | €666.47 |
| 3rd bracket | €5,251 | 21.2% | €1,113.21 |
| 4th bracket | €2,162 | 24.1% | €521.04 |
| Total | €20,000 | — | ≈€3,343 |
The effective rate is about 16.7% — far below the 24.1% marginal rate. Tax credits (health, education, housing, family expenses validated in e-Fatura) then reduce the final bill.
Brackets vs. monthly withholding tables
The brackets set the annual tax due; the withholding tables set the monthly advance deducted from salaries. If your withholdings exceed the annual tax, you get a refund the following year. Estimate your monthly take-home with our net salary simulator 2026.
New residents may qualify for the IFICI regime — a flat 20% on qualifying income for 10 years instead of the progressive scale. Workers up to age 35 may qualify for the IRS Jovem partial exemption.
How to pay less IRS in 2026 (legally)
- Validate invoices in e-Fatura through the year — lost deductions cannot be recovered;
- Married couples: simulate joint vs. separate assessment before filing;
- PPR retirement contributions earn a tax credit up to the legal limits;
- Self-employed: review whether the simplified regime still beats organised accounting;
- Company owners: the salary/dividend mix and exempt benefits such as meal allowance change the total bill.
HVR has done this planning for SMEs, directors and freelancers since 2014 — in English. Request a free consultation; we reply within 24 hours.
Frequently asked questions
Which income do the 2026 brackets apply to?
Income earned during 2026, declared in the IRS return filed between April and June 2027. The return filed in 2026 still uses the 2025 brackets.
What changed in the 2026 brackets?
All thresholds rose 3.51% and the rates of brackets 2 to 5 fell 0.3 percentage points (Law 73-A/2025). Other rates are unchanged, including the top 48%.
Does moving up a bracket reduce my net income?
No. Only the slice of income above each threshold is taxed at the higher rate, so a raise always increases net income.
What is the difference between brackets and withholding tables?
Brackets set the annual tax; withholding tables set the monthly advance taken from your salary. The difference between the two becomes your refund or payment when you file.
Do expats pay these rates?
Portuguese tax residents do, on worldwide income — unless they qualify for the IFICI regime (20% flat on eligible income for 10 years). See our IFICI guide for eligibility.