2027 Budget: proposal updates IRS tax brackets by 3.88% and raises tax-free minimum
What the proposal plans
On 8 October 2026, the Government delivered to the Assembleia da República (Parliament) Bill no. 110/XVII/2.ª (Proposta de Lei n.º 110/XVII/2.ª), which approves the State Budget (Orçamento do Estado, OE) for 2027. For IRS (personal income tax), the text changes article 68 of the IRS Code and widens the limits of the nine tax brackets (escalões) by about 3.88%, keeping the already reduced rates of the first six brackets.
| Bracket | Taxable income 2026 | Proposal for 2027 | Rate |
|---|---|---|---|
| 1st | up to 8,342 € | up to 8,666 € | 12.2% |
| 2nd | up to 12,587 € | up to 13,075 € | 15.2% |
| 3rd | up to 17,838 € | up to 18,530 € | 20.7% |
| 4th | up to 23,089 € | up to 23,985 € | 23.6% |
| 5th | up to 29,397 € | up to 30,538 € | 30.6% |
| 6th | up to 43,090 € | up to 44,762 € | 34.6% |
| 7th | up to 46,566 € | up to 48,373 € | 43.1% |
| 8th | up to 86,634 € | up to 89,995 € | 44.6% |
| 9th | more than 86,634 € | more than 89,995 € | 48% |
The additional solidarity rate (taxa adicional de solidariedade, 2.5% and 5%) would apply above 89,995 €, in line with the last bracket.
Mínimo de existência
The proposal sets the reference value of the mínimo de existência (minimum income exempt from IRS) at the higher of 13,580 € and 1.5 × 14 × IAS (Indexante dos Apoios Sociais, the social support index). In 2026 the fixed amount is 12,880 €. In practice, people who earn the minimum wage would still pay no IRS.
From when and who it applies to
If approved without changes, the new table applies to 2027 income, declared in the IRS return filed in 2028. The 2027 withholding tax tables (tabelas de retenção na fonte) are published separately, by despacho (government order), usually in January. It covers all residents with income subject to IRS.
Important: this is still a proposal. The general debate (debate na generalidade) takes place on 27 and 28 October and the final overall vote is set for 24 November 2026. The amounts may change during the detailed debate (especialidade).
What you can do
- Understand the effect on your pay with the net salary guide.
- Review how the yearly tax return works in the guide to filing your IRS return.
- If you are 35 or younger, check the IRS Jovem rules.
What to do now
Official sources
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