Published in DR decree-law that reduces IRS rates for 2026

A new decree-law published in Portugal reduces IRS rates for the first six income brackets starting in 2026, with a 50% discount on withholding for November salaries. The changes, retroactive to January, lower rates from 12.50% to 12.20% for the first bracket and from 34.90% to 34.60% for the sixth. Higher income earners above certain thresholds will not benefit from the discount. The adjustments were authorized by the government to streamline the tax code without direct parliamentary changes. The withholding mechanism allows for monthly tax payments, with final adjustments made at the end of the tax year.