Portugal has published Decree-Law No. 212/2026, reducing the general rates for the first six taxable income brackets under article 68 of the Personal Income Tax Code, with effect from 1 January 2026.
Portugal published Decree-Law No. 212/2026 on 4 November 2026, amending article 68 of the Portuguese Personal Income Tax Code (Código do IRS) to lower the general rates on the first six taxable income brackets. The reduction applies to income obtained in 2026 and takes effect from 1 January 2026.
The decree-law enters into force on the day following publication. The government describes it as the fifth personal income tax reduction since April 2024.
Revised rates
The standard rates for the first six brackets fall to 12.2%, 15.2%, 20.7%, 23.6%, 30.6% and 34.6%, respectively. The corresponding average rates are 12.200%, 13.212%, 15.416%, 17.277%, 20.136% and 24.732%.
The standard rates for the remaining three brackets are unchanged at 43.1%, 44.6% and 48%. The taxable income thresholds also remain the same, with the first six brackets covering taxable income up to EUR 43,090.
| Bracket | Taxable income (EUR) | Normal rate (%) | Average rate (%) |
| 1st | Up to 8,342 | 12.2 | 12.200 |
| 2nd | Over 8,342 up to 12,587 | 15.2 | 13.212 |
| 3rd | Over 12,587 up to 17,838 | 20.7 | 15.416 |
| 4th | Over 17,838 up to 23,089 | 23.6 | 17.277 |
| 5th | Over 23,089 up to 29,397 | 30.6 | 20.136 |
| 6th | Over 29,397 up to 43,090 | 34.6 | 24.732 |
| 7th | Over 43,090 up to 46,566 | 43.1 | 26.103 |
| 8th | Over 46,566 up to 86,634 | 44.6 | 34.658 |
| 9th | Over 86,634 | 48 | – |
Who benefits
Because personal income tax is progressive, the cut also benefits taxpayers in higher brackets, in respect of the portions of their income falling within the first six brackets.
Policy aims
The measure was adopted by the XXV Constitutional Government under the legislative authorisation granted by Law No. 64-B/2026 of 22 October 2026. According to the government, it is meant to reflect economic performance and strict management of public accounts in household disposable income. It also aims to reward work, enhance family income, encourage savings and strengthen national economic competitiveness.
The government says the decree continues a policy of lowering the tax burden on labour and pensions begun under the XXIV Constitutional Government.
Legislative timeline
The Council of Ministers approved the decree-law on 29 October 2026. President of the Republic António José Martins Seguro promulgated it on 2 November 2026, and Prime Minister Luís Montenegro countersigned it on 3 November 2026.
