Portugal Tax Changes 2027: IRS Brackets, Rates and Net Pay
The 2027 budget bill indexes the IRS brackets by 3.88%, keeps the lower rates Parliament has just approved for 2026 and raises the tax-free minimum. It is a draft until the final vote on 24 November 2026.
Main change
Draft budget OE2027, from 1 January 2027
IRS scale: 2026 vs 2027
| Rate | 2026 taxable income | 2027 taxable income | Status |
|---|---|---|---|
| 12.2% | up to €8,342 | up to €8,666 | Draft |
| 15.2% | €8,342–12,587 | €8,666–13,075 | Draft |
| 20.7% | €12,587–17,838 | €13,075–18,530 | Draft |
| 23.6% | €17,838–23,089 | €18,530–23,985 | Draft |
| 30.6% | €23,089–29,397 | €23,985–30,538 | Draft |
| 34.6% | €29,397–43,090 | €30,538–44,762 | Draft |
| 43.1% | €43,090–46,566 | €44,762–48,373 | Draft |
| 44.6% | €46,566–86,634 | €48,373–89,995 | Draft |
| 48% | above €86,634 | above €89,995 | Draft |
Taxable income = gross pay minus the specific deduction; tax is charged band by band. The 2026 rates for bands 1–6 are the reduced rates Parliament approved on 9 October 2026, retroactive to 1 January (before: 12.5 / 15.7 / 21.2 / 24.1 / 31.1 / 34.9%). The decree-law is pending. Mainland scale: Madeira and the Azores have their own.
Other parameters: 2026 vs 2027
| Parameter | 2026 | 2027 | Status |
|---|---|---|---|
| Solidarity surcharge, 2.5% band | from €80,000 | from €89,995 (5% above €250,000) | Draft |
| Tax-free minimum (<em>mínimo de existência</em>) | €12,880 | €13,580, or 1.5 × 14 × IAS if higher | Draft |
| Minimum wage (RMMG) | €920 × 14 | €970 × 14 | Announced in budget report; decree-law Nov–Dec |
| Specific deduction, employees | €4,587.09 (8.54 × IAS) | 8.54 × IAS 2027 | Pending: IAS due Dec–Jan |
| IRS Jovem, IFICI | in force | no change | Not amended |
| Social security: employee / self-employed | 11% / 21.4% on 70% of income | no change | No change found |
Take-home pay: 2026 vs 2027
| Gross / year | IRS 2026 (reduced rates) | IRS 2027 (draft) | Net pay 2027 | Change / year |
|---|---|---|---|---|
| €25,000 | €3,108 | €3,051 | €19,199 | +€57 |
| €40,000 | €7,751 | €7,586 | €28,014 | +€165 |
| €60,000 | €14,953 | €14,619 | €38,781 | +€334 |
Single employee, no children, mainland Portugal, same gross in both years. 11% social security; specific deduction €4,587.09 (at €60,000 the higher social security contributions are deducted instead); €250 general family expenses deduction. 2027 uses the draft scale with IAS held at its 2026 value, which is still pending for 2027; a higher IAS would lower the 2027 IRS slightly further. Under the old 2026 rates IRS was €3,193 / €7,899 / €15,125.
Employees
What changes on your payslip
<strong>2026 refund.</strong> The reduced rates cover all 2026 income. On €25,000 / €40,000 / €60,000 gross the cut is worth about €85 / €148 / €171 for the year. New withholding tables are expected from November 2026 salaries; the rest comes back in the return filed in 2027.
<strong>2027 brackets.</strong> Wider bands save a further €57–334 a year in the examples above. The 2027 withholding tables (<em>tabelas de retenção</em>) usually follow in December–January.
<strong>Minimum wage.</strong> €970 × 14 = €13,580, exactly the new tax-free minimum, so a full-time minimum-wage worker would pay no IRS.
<strong>Productivity bonus.</strong> If your employer raises average base pay by at least 4.5% (and by at least 4.5% for staff at or below the average), it can pay a bonus of up to 6% of base pay free of IRS and social security (draft).
<strong>Specific deduction.</strong> The <em>dedução específica</em> stays at 8.54 × IAS (the social support index). IAS 2027 is published in December–January, so the exact 2027 amount is still pending.
Self-employed
Category B income
The new brackets and rates apply to self-employment income (category B) in the same way as to salaries. The bill does not change the simplified-regime coefficients, and social security stays at 21.4% on 70% of relevant income.
Expats and relocants
Special regimes stay as they are
<strong>IFICI</strong> ("NHR 2.0"): 20% flat rate on qualifying income for 10 years, not amended by OE2027.
<strong>IRS Jovem</strong>: under-35s keep the 10-year exemption of 100%, then 75%, 50% and 25%, capped at 55 × IAS.
<strong>Visas</strong>: income thresholds for some residence visas, such as D7 and the digital nomad visa, are linked to the minimum wage. If you apply in 2027, check the official requirement once the new minimum wage is set.
Which year's rules apply
FAQ
Will IRS go down in Portugal in 2027?
Slightly, if the draft budget passes as filed. Bracket limits rise by 3.88% and the rates stay at the reduced 2026 levels, so a single employee on €40,000 gross would pay about €165 less IRS than in 2026, and about €57 less on €25,000. The bill can still be amended before the final vote on 24 November 2026.
Is the 2026 IRS rate cut already in force?
Not formally. Parliament approved the legislative authorisation on 9 October 2026; the government's decree-law and its promulgation are still pending. Once published, the lower rates apply to all 2026 income: new withholding tables are expected from November 2026 salaries, and anything over-withheld earlier in the year comes back through the IRS return filed in 2027.
Does the 2027 budget change IFICI or IRS Jovem?
No. The bill amends only articles 12-A, 68, 68-A and 70 of the IRS code and one article of the tax-benefits statute (the productivity bonus). IFICI, the 20% flat rate for 10 years that replaced NHR, and IRS Jovem for under-35s stay as they are.
What is the minimum wage in Portugal in 2027?
The government's budget report puts it at €970 a month, paid 14 times, up from €920 in 2026. The amount is set by a separate decree-law, usually in November or December. With €970 × 14 = €13,580, a full-time minimum-wage worker would pay no IRS under the draft tax-free minimum.
Sources
Keep reading
Portugal tax calculator
Gross-to-net salary with IRS and social security.
Salaries in Portugal
Typical gross and net pay by level.
IFICI (NHR 2.0) explained
Who qualifies for the 20% flat rate and how it works.
Cost of hiring in Portugal
Employer contributions on top of gross salary.
Tax changes 2027 by country
What changes next year in other countries.
