Government to give modest tax cut in budget
Portugal’s socialist government has pledged to cut taxes for its State Budget 2024 and has ruled out creating any new tax bands.
But the government will not reveal the extent of its tax cuts until the State Budget is presented on October 10 and the only thing that is known, and is in the Stability Programme 2023-2027, is that there will be a reduction in the tax burden of €525 million.
Tax thresholds will be updated by at least 4.8% as foreseen in the medium-term agreement to improve salaries that the government signed in October last year with business and industry associations and unions. Only the union CGTP remained outside the agreement.
The government thinks that the current nine income tax brackets, after a specific deduction of €4,105, is a record low. Tax cuts will be done by updating the tax brackets by at least 4.8%, tax cuts and updating the limits on deductions and general and family expenses.
The social accord has established an annual increase of monthly salaries to the end of the government ’s term in office, according to the document. This year salary increases of 5.1% have been agreed, which is why the tax thresholds have been updated by 5.1%.
The salaries agreement signed with social partners foresees a salary increase of 4.8% in 2024, thereby ensuring an increase in the thresholds of each bracket of IRS income tax by at least 4.8% that will be necessary to avoid taxes eating up this increase.
This year the government has remained tight-lipped on the changes to the IRS in terms of tax brackets, stating that any changes will be announced when the State Budget for 2024 is presented on October 10.