Decree-law reduces rates for the first six brackets of IRS

A new decree-law modifies the IRS Code to lower tax rates for the first six income brackets starting in 2026, with a 50% reduction in withholding for November salaries. The changes, retroactive to January, include specific rate reductions for each bracket. Normal rates will resume in December, and the adjustments benefit not only those in the lower brackets but also higher earners on the reduced portions of their income. The government, led by Luís Montenegro, opted for a decree-law approach to implement these changes, which were authorized by parliament. Higher earners above certain thresholds will not benefit from the 50% reduction in withholding.