What will I actually pay in Portuguese income tax (IRS)?
Short answer: employment, self-employment and pension income go through one progressive scale from 12.5% to 48%; dividends and deposit interest are taxed separately at a flat 28%.
The 2026 scale
These are the general rates in force for 2026. Brackets were raised by 3.51% and the rates in the 2nd to 5th bands were cut by 0.3 percentage points.
| Taxable income | Rate |
|---|---|
| 0 – 8 342 € | 12,5% |
| 8 342 – 12 587 € | 15,7% |
| 12 587 – 17 838 € | 21,2% |
| 17 838 – 23 089 € | 24,1% |
| 23 089 – 29 397 € | 31,1% |
| 29 397 – 43 090 € | 34,9% |
| 43 090 – 46 566 € | 43,1% |
| 46 566 – 86 634 € | 44,6% |
| > 86 634 € | 48% |
A further cut announced for November 2026
On 9 September the government announced another cut to the rates of the first six brackets (taxable income up to about €43,000), worth €400 million and reaching around two million households. It will show up as lower monthly withholding from November on salaries and pensions, including the Christmas bonus. Higher earners also pay a little less, because the lower slices of their income are taxed at the reduced rates. The new per-bracket rates have not been published yet, so the table above still shows the scale before the cut.
The part that surprises everyone
Your whole income is not taxed at the top rate you reach. The calculation is done in two parts: the average rate applies to the amount that fills the bracket below, and the marginal rate applies only to the excess.
Worked example — €40,000 of taxable income. The first €29,397 is taxed at the average rate for that band (20.579%) = €6,050. The remaining €10,603 is taxed at 34.9% = €3,700. Total ≈ €9,750, an effective rate of about 24.4% — not 34.9%.
Dividends, interest and other capital income
These are withheld at a flat 28% and that is normally the end of it. You may instead choose englobamento — pooling them with your other income at progressive rates, with the tax already withheld credited as an advance. That only helps if your overall average rate stays below 28%.
Two more things worth knowing
- The mínimo de existência for 2026 is €12,880 — income at the level of the national minimum wage is not left worse off by the tax.
- Withholding tables exempt monthly income up to €920, the 2026 minimum wage.
Beyond this, a solidarity surcharge on high incomes, joint taxation for couples and treaty relief on foreign income can all change your bill. Those depend on your specific case — check them with a contabilista certificado before you budget.
Sources
Portal das Finanças — CIRS art. 68 (tabela 2026) Portal das Finanças — CIRS art. 71 (taxas liberatórias) Orçamento do Estado — tabelas de retenção IRS 2026 Notícias ao Minuto — alívio do IRS no salário de novembro (09.09.2026)Keep reading
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