The Council of Ministers has approved a bill authorising a reduction in personal income tax rates for the first six brackets of taxable income, taking effect for earnings from 1 January 2026, marking the fifth such cut since April 2024.
Portugal’s Council of Ministers, chaired by the Prime Minister, approved Bill No. 108/XVII/2.ª on 17 September 2026, seeking parliamentary authorisation to lower the general rates of personal income tax (PIT) applicable to the first six brackets of taxable income.
The bill, submitted to Parliament with a request for priority and urgency, forms part of the government’s continuing strategy to ease the tax burden on personal income, particularly on earnings from work, with the stated aims of valuing labour, strengthening household income, encouraging savings and boosting the competitiveness of the Portuguese economy.
Under Article 2 of the proposal, the Government seeks authority to amend Article 68 of the Personal Income Tax Code – approved under Decree-Law No. 442-A/88 of 30 November – by reducing the normal rates on the first six brackets of taxable income to 12.2%, 15.2%, 20.7%, 23.6%, 30.6% and 34.6%, respectively, along with a corresponding adjustment to the average rates. The legislative authorisation, once granted, will remain valid for 180 days.
A draft Decreto-Lei Autorizado accompanying the proposal sets out the revised rate table in full:
| Rendimento coletável (EUR) | Normal rate | Average rate |
| Up to 8,342 | 12.20% | 12.200% |
| 8,342 to 12,587 | 15.20% | 13.212% |
| 12,587 to 17,838 | 20.70% | 15.416% |
| 17,838 to 23,089 | 23.60% | 17.277% |
| 23,089 to 29,397 | 30.60% | 20.136% |
| 29,397 to 43,090 | 34.60% | 24.732% |
| 43,090 to 46,566 | 43.10% | 26.103% |
| 46,566 to 86,634 | 44.60% | 34.658% |
| Above 86,634 | 48.00% | – |
The reduction applies to income earned in 2026 and takes effect retroactively from 1 January that year. Because personal income tax is progressive, the Government noted that the cut benefits not only taxpayers whose income falls within the six affected brackets, but also those in higher brackets, in respect of the portion of their income taxed at the now-reduced rates.
The Government described the measure as the fifth reduction to personal income tax since April 2024, continuing a trajectory of tax relief on work and pension income that began under the previous government and has been carried forward by the current administration.
Both the bill and the accompanying authorised decree-law state that the legislation will enter into force on the day following its publication.
