Government approves reduction of IRS rates for 2026 after parliamentary authorization

The government approved a decree-law to reduce IRS rates for the first six income brackets in 2026, following parliamentary authorization. The changes will be retroactive to January and will affect withholding taxes starting in November. The new rates will be 12.20%, 15.20%, 20.70%, 23.60%, 30.60%, and 34.60%. A 50% reduction in withholding for November will apply to most salaries and pensions, with normal rates resuming in December. Higher incomes above certain thresholds will be exempt from the 50% cut. The adjustments aim to ease the tax burden for lower-income earners while maintaining regular tax collection throughout the year.