Portugal enacts lower 2026 personal income-tax rates

Rates and application

The decree enters into force on 5 November but expressly applies to income earned throughout 2026 from 1 January. It implements the authority granted by Law 64-B/2026 of 22 October. The amended Article 68 table sets marginal rates of 12.20%, 15.20%, 20.70%, 23.60%, 30.60% and 34.60% for the first six bands, ending at taxable income of €43,090. The next three rates remain 43.10%, 44.60% and 48%.^[1]

These are marginal bands. Taxpayers above €43,090 also benefit from the lower rates on the portions of taxable income falling in the first six bands, as the decree’s preamble notes. The statutory table does not determine a taxpayer’s final saving without the person’s taxable income, deductions, credits and other circumstances.^[1]

Payroll distinction

Employers and payroll teams should distinguish this annual-rate amendment from the separate exceptional November withholding adjustment issued by the Tax and Customs Authority. Circular 5/2026 applies the normal withholding tables to employment and pension income paid from 1 to 30 November 2026, but reduces the calculated withholding amount by 50%, subject to the circular’s income and territorial limits.^[1][2]

Action for employers and mobile employees

Employers and payroll providers should apply the amended annual rates in relevant 2026-year calculations and separately apply Circular 5/2026 to qualifying November payroll. Where November withholding was not adjusted, the circular permits the withholding agent to correct it in later withholding through the end of December 2026. This is a personal-tax and payroll development, not a Portuguese corporate income-tax rate change.^[1][2]