Portugal's 2026 IRS brackets (12.5% to 48%), why your effective rate is below your bracket, worked examples, solidarity surcharge and non-re
Short answer. In 2026 Portuguese residents pay income tax (IRS) at rates from 12.5% to 48%, across nine brackets. These are marginal rates, so the rate you pay on your whole income is always lower than your top bracket.
This guide sets out the 2026 brackets, shows how the effective rate is built, works through four examples, and covers what UK and US readers most often miss: the solidarity surcharge, what counts as taxable income, the 20% IFICI flat rate, and how non-residents and residents with foreign income are taxed.
The brackets below are set by article 68 of the Portuguese IRS Code (CIRS), as amended by the 2026 State Budget law (Lei n.º 73-A/2025, 30 December 2025). They apply to income earned in calendar year 2026, which residents declare in 2027. The figures are taxable income: what remains after the specific deductions explained further down.
| Taxable income (EUR) | Marginal rate | Average rate at top of bracket |
|---|---|---|
| Up to 8,342 | 12.5% | 12.5% |
| 8,342 to 12,587 | 15.7% | 13.6% |
| 12,587 to 17,838 | 21.2% | 15.8% |
| 17,838 to 23,089 | 24.1% | 17.7% |
| 23,089 to 29,397 | 31.1% | 20.6% |
| 29,397 to 43,090 | 34.9% | 25.1% |
| 43,090 to 46,566 | 43.1% | 26.5% |
| 46,566 to 86,634 | 44.6% | 34.9% |
| Above 86,634 | 48.0% | rises towards 48% |
The third column is the average rate the law itself publishes (column B of the official table). It is the effective rate for someone whose taxable income lands exactly on the top of that bracket, before any surcharge or tax credits. The law has kindly done the arithmetic for you.
Think of the brackets as a staircase, and of your income as water filling it from the bottom. The first 8,342 euros settle on the lowest step and are taxed at 12.5%. The next slice, up to 12,587, rests on the second step at 15.7%, and so on. Only the part of your income that reaches the top step is taxed at that step's rate.
So a person earning 50,000 euros does not pay 44.6% on 50,000. They pay 12.5% on the first slice, 15.7% on the next, and so on, with 44.6% applied only to the last 3,434 euros above 46,566. Add the slices, divide by 50,000, and the overall rate is 27.7%. That is the effective rate; 44.6% is the marginal rate, the tax on the next euro you earn.
Two consequences follow. First, the popular belief that moving into a higher bracket taxes all your income at the higher rate is wrong. A pay rise that pushes you up a bracket never leaves you with less money: only the extra income is taxed at the higher rate. The promotion that makes you poorer belongs to dinner-party folklore, not to the code. Second, when comparing Portugal with the UK or the US, compare effective rates, not top rates. Portugal's 48% top rate looks steep next to the headline rates in the UK or the US, but it bites only above 86,634 euros of taxable income, and the lower brackets start well below those of either country.
Assumptions: single resident, taxable income after specific deductions, no tax credits for family or expenses, no IFICI or other special regime. Figures are rounded. These are illustrations, not advice; your own return will differ.
| Taxable income (EUR) | Marginal bracket | Tax before surcharge (EUR) | Effective rate | Solidarity surcharge (EUR) | Effective rate incl. surcharge |
|---|---|---|---|---|---|
| 30,000 | 34.9% | 6,260 | 20.9% | 0 | 20.9% |
| 50,000 | 44.6% | 13,858 | 27.7% | 0 | 27.7% |
| 86,634 | 44.6% | 30,197 | 34.9% | 166 | 35.0% |
| 120,000 | 48.0% | 46,213 | 38.5% | 1,000 | 39.3% |
Look at the gap between the two rates at every level. At 120,000 euros the taxpayer is firmly in the 48% bracket yet hands over 38.5% of taxable income to the general scale, or 39.3% once the solidarity surcharge is added. Real returns usually land lower still, because tax credits for health, education, housing and dependants are subtracted after this calculation.
Article 68-A of the CIRS adds an extra levy on high taxable incomes, on top of the general scale: 2.5% on the slice of taxable income between 80,000 and 250,000 euros, and 5% on the slice above 250,000 euros. It is charged on the slice, not on the whole, so someone with 120,000 euros pays 2.5% on 40,000, which is 1,000 euros. For married couples taxed jointly the calculation is done on half the joint taxable income and the result is doubled.
The brackets apply to taxable income (rendimento coletável), which article 22 of the CIRS defines as the sum of your income across the various categories, after the deductions the code allows. In practice: gross income minus the specific deduction for your income category. Employees and pensioners get a fixed allowance; self-employed professionals deduct costs or use the simplified regime. The specific deduction figures change with the budget and are not reproduced here; check the current year's value or ask your adviser.
Two further mechanisms lower the bill for modest incomes. The minimum-existence rule (article 70) guarantees that employment and pension income up to a reference floor, set at the higher of 12,880 euros or 1.5 x 14 x the social support index (IAS), is not taxed away. And after the scale is applied, personal tax credits for dependants, health, education, housing and general expenses come off the tax itself, not off the income. That makes them rather more valuable than they sound.
New residents who qualify for IFICI, the scientific research and innovation incentive that replaced the non-habitual resident (NHR) regime, can opt to have their net employment and self-employment income taxed at a special flat rate of 20% for ten consecutive years from the year they register as Portuguese tax residents (article 58-A of the Tax Benefits Statute, EBF, added by Lei n.º 82/2023). For IFICI beneficiaries, foreign employment, self-employment, investment, rental and capital-gains income (categories A, B, E, F and G) is exempt in Portugal, but it is added in full when fixing the rate on any other income taxed on the scale (CIRS article 81, n.º 4). Foreign pensions are not exempt (AT Ofício-Circulado 20276/2025, question 2), and income paid from a blacklisted jurisdiction is taxed at 35% (article 81, n.º 5).
Set the 20% against the table above and the attraction is obvious for anyone above roughly 30,000 euros of taxable income, where the ordinary effective rate already exceeds 20%. Eligibility, however, is strict and activity-based. The door is generous, but it has a doorman. See our IFICI guide for who qualifies and how to apply.
Non-residents pay Portuguese tax only on income sourced in Portugal (CIRS article 15, n.º 2), and the progressive scale generally does not apply to them. In its place, flat rates are withheld or charged:
A double-tax treaty, including those with the UK and the US, may reduce or remove the Portuguese charge on some income. Treaty relief is not automatic: it usually requires the payer to hold a certified form before paying. Paperwork, as ever, is the price of good manners between nations.
If you are tax resident in Portugal, IRS applies to your worldwide income, including income obtained outside Portugal (CIRS article 15, n.º 1). A UK pension, a US salary paid remotely, dividends from a brokerage abroad: all are declared in Portugal and taxed at the rates above (or at the flat rates for investment income where those apply). Anyone who assumes income earned abroad stays abroad has it backwards. There are two exceptions. Where a treaty leaves the income to the other country and Portugal applies exemption with progression, the income is not taxed here but still counts when fixing your rate on other income (CIRS article 81, n.º 9). Residents still in the old non-habitual resident regime follow transitional rules with the same effect on the rate (former article 81, n.º 7, kept in force by article 236, n.º 3, of Lei n.º 82/2023).
To stop you being taxed twice, Portugal grants a credit for foreign tax paid, limited to the lower of the foreign tax and the Portuguese tax attributable to that income (article 81, n.º 1). Where a treaty applies, the credit cannot exceed the tax the treaty allows the other country to charge (article 81, n.º 2). A credit left out of the return can be added by a replacement return until the deadline for contesting the assessment (Código de Procedimento e de Processo Tributário, article 59, n.º 3, b) II). Treaties decide which country has the first right to tax each type of income. Foreign income is reported on Annex J of the Modelo 3 return. A separate guide to Annex J, with the categories, exchange rates and evidence the tax office expects, is in preparation.
A note for US citizens: the United States taxes you on citizenship, so a US return is still due wherever you live. The interaction between the US foreign tax credit and Portuguese tax needs a US-qualified preparer alongside your Portuguese adviser.
The table and the examples are enough to sanity-check an offer or a budget. Get a professional opinion before you act if any of these apply: you are deciding whether to become Portuguese tax resident; you may qualify for IFICI; you receive income from more than one country; you hold a company, trust or pension outside Portugal; or your income includes capital gains on property or crypto. In each of those the rate is the easy part. The classification of the income is where money is won or lost.
Legal character: all sources are the consolidated code text published by the Portuguese Tax Authority. Where the enacted text in the Diário da República differs, the Diário da República prevails.
Written by OnCorporate Editorial Team. Approved for publication by João Teixeira de Freitas, Director of Operations. Tax review by Luiz Augusto Teixeira de Freitas, Director: in progress. Applies to tax year 2026, Portugal. Published 19 October 2026. Last substantively reviewed 19 October 2026.
AI tools assisted with research organisation; the OnCorporate editorial team checked sources and wording; João Teixeira de Freitas approved publication; Luiz Augusto Teixeira de Freitas's tax review is in progress.
This article is general information, not tax advice. OnCorporate is a Lisbon tax and accounting firm serving international clients. To have your own position reviewed, contact us.
