Portugal Income Tax Guide 2025 — IRS Brackets & Deductions
This page's own title and description previously disagreed with each other — "12.5%–48%" in one place and "14%–48%" in the other. The correct 2026 range is 12.5% to 48%, confirmed below.
The nine 2026 brackets
Portugal's IRS (Imposto sobre o Rendimento das Pessoas Singulares) is progressive across nine brackets, updated for 2026 under Lei n.º 73-A/2025 with a 3.51% uplift to the income thresholds and a 0.3 percentage point cut to brackets two through five:
| Bracket | Taxable income | Marginal rate |
|---|---|---|
| 1 | Up to €8,342 | 12.5% |
| 2 | €8,342 – €12,587 | 15.7% |
| 3 | €12,587 – €17,838 | 21.2% |
| 4 | €17,838 – €23,089 | 24.1% |
| 5 | €23,089 – €29,397 | 31.1% |
| 6 | €29,397 – €43,090 | 34.9% |
| 7 | €43,090 – €46,566 | 43.1% |
| 8 | €46,566 – €86,634 | 44.6% |
| 9 | Above €86,634 | 48.0% |
As with any bracket table, each rate applies only to the slice of income within that band — an income of €50,000 is not taxed at 44.6% throughout, only the portion above €46,566 is.
Two things stacked on top
A municipal surcharge (derrama) of up to 1.5% can apply on top of national IRS, set individually by each of Portugal's 308 municipalities — Lisbon and Porto both charge the maximum, while many smaller interior municipalities charge less or nothing.
A solidarity surtax applies above the ordinary brackets for higher incomes: broadly 2.5% on the portion of taxable income between €80,000 and €250,000, rising to 5% above €250,000 — layered on top of the 48% top marginal rate, not replacing it.
Non-residents
A non-resident is generally taxed at a flat 25% on Portuguese-source employment, self-employment and pension income, rather than against the progressive bracket table residents use — a materially different (and, for modest income, often higher) outcome than the resident calculation would give for the same euro amount.
The minimum existence threshold
A "minimum existence" floor protects the lowest earners: for 2026 it rose to €12,880, tracking the increase in the national minimum wage to €920 a month, so that someone earning at or near the minimum wage continues to have no tax withheld at source.
Worked example
A single, Lisbon-resident taxpayer has €35,000 of taxable income for 2026 (Lisbon charges the maximum 1.5% municipal surcharge).
- Bracket 1: €8,342 × 12.5% = €1,042.75
- Bracket 2: (€12,587 − €8,342) × 15.7% = €4,245 × 15.7% = €666.47
- Bracket 3: (€17,838 − €12,587) × 21.2% = €5,251 × 21.2% = €1,113.21
- Bracket 4: (€23,089 − €17,838) × 24.1% = €5,251 × 24.1% = €1,265.49
- Bracket 5: (€29,397 − €23,089) × 31.1% = €6,308 × 31.1% = €1,961.79
- Bracket 6 (remaining income): (€35,000 − €29,397) × 34.9% = €5,603 × 34.9% = €1,955.45
- National IRS subtotal: €8,005.16
- Plus Lisbon's 1.5% municipal surcharge: €8,005.16 × 1.5% = €120.08
- Total: approximately €8,125.24, an effective rate of about 23.2% on the full €35,000 — well under the 34.9% marginal rate that applied to the last euro earned.
Filing
The annual return — Modelo 3 — is filed through the Portal das Finanças between 1 April and 30 June of the year following the tax year. Portugal's tax year runs with the calendar year, so 2026 income is declared between April and June 2027.
FAQ
Q: Does the solidarity surtax replace the 48% top bracket? A: No — it is layered on top, so very high earners face 48% plus a further 2.5% or 5% on the portion of income within the surtax bands, not one figure instead of the other.
Q: If I move mid-year, do I pay the resident or non-resident rate? A: It depends on your tax-residency status for the year in question and can involve Portugal's own split-year-style residency rules — this is a case worth checking against your specific dates with the Autoridade Tributária or an accountant rather than assuming either rate applies by default.
Q: Does every municipality charge the same surcharge? A: No — the municipal surcharge is set locally, up to a 1.5% cap; Lisbon and Porto both charge the maximum, but many other municipalities charge less.
Sources
Figures verified as of 30 July 2026:
- Lei n.º 73-A/2025 (OE2026 IRS brackets) (nine brackets from 12.5% to 48%, 3.51% threshold uplift, 0.3-point cut to brackets 2–5)
- PwC Portugal tax summaries (confirms the 12.5%–48% overall range, 25% flat non-resident rate, solidarity surtax bands, municipal surcharge cap)
- Portal das Finanças (Modelo 3 filing window, 1 April–30 June)
- Minimum existence threshold and 2026 minimum wage update (€12,880 threshold, €920/month minimum wage)