Portugal's fifth income tax cut still needs a vote before November payslips change
Rates fall by 0.3 to 0.5 percentage points across the first six brackets, at a cost of about 400 million euros and covering nearly three million households. The government approved the bill on Thursday; parliament has not voted on it.
Portugal’s cabinet signed off a bill on Thursday that lowers IRS income tax rates across the first six brackets. The cut runs from 0.3 to 0.5 percentage points, costs roughly 400 million euros and, according to the government’s own statement, reaches close to three million households.
The word doing the heavy lifting there is bill. Tax rates are not changed in cabinet. They are changed by a law passed in the Assembleia da República, and that is where the text goes next, carried by a governing bench that cannot pass it on its own numbers. Until then, the withholding tables in force are still January’s.
Where the cut actually bites
Bracket one comes down 0.3 points. Brackets two to five each lose half a point. Bracket six drops 0.3. Brackets seven to nine are untouched.
That does not mean high earners feel nothing. IRS is progressive, so everyone’s income is sliced bracket by bracket, and even someone reaching the ninth band passes through the six that have just been trimmed on the way up. The relief is deepest in the middle because that is where the cut is deepest.
What is promised for November
The government says the money shows up in the November salary and the Christmas bonus, through rebuilt withholding tables designed to work retroactively to January 2026. In practice, anyone who qualifies collects in one go the tax they overpaid across the year.
Withholding less now has a familiar flip side: a thinner refund the following spring, or a bill. It is not extra money. It is the same money arriving earlier.
The sentence worth reading slowly
The official statement says that in the lowest-income households the saving can reach the equivalent of a month’s pay. It carries a condition attached to it: that figure refers to the reductions already applied, plural, across five separate cuts and 2,400 million euros of cumulative relief, not to this fifth one on its own. Anyone who wants the number for their own household can find it in the simulator the government published the same evening.
The cut was first announced on 8 September, during the censure motion debate, alongside the one-off pension supplement worth up to €1,611.13. Both land in the same corner of the household calendar as the 2.7% rise in regulated electricity tariffs from October.
Chart: Tugadaily · government data
