IRS tax cuts will increase salaries by between €2 and €15 per month

If a proposal handed to parliament by the Portuguese government to reduce IRS taxes is passed, taxpayers can expect to see an increase of between €2 and €15 net monthly in their wage packets from September.

According to simulations from the Ministry of Finances, the annual tax break from the measure will mean that workers will be between €34 and €207 better off.

A single employed person without children with a gross monthly salary of €1,000 currently pays an annual IRS of €409.

The Ministry of Finances estimates that this tax payer will save €34 per year compared to the State Budget of 2025, meaning €2 per month.

Those on €1,500 will make an annual saving of €83 (€5.93 per month), €2,000 – €124 (€8.86 per month), €2,500 – €166 (€11.86 per month) and €3,000 – €207 (€14.79 per month).

A couple without children, where each earns a gross salary of €1,500, currently has to pay €4,010 in IRS per year.

With the changes they will save €165 or €12 per month. Those earning €3,000, will save €414 or €29.57 per month.

In the case of a couple with two children, where each member receives a gross salary of €2,500, the IRS is €10,903. The annual expected saving will be €332, corresponding to a monthly tax cut of €24 (€12 per person).

A single pensioner without dependents with a gross pension of €1,000 will annually save €34 or €2 per month. At €2,000 they will make a saving of €124 a year or €9 per month.

These changes require, however, a green light from parliament and so it is not clear if these tax cuts proposed by the government will be applied to the number given that the ruling AD do not have a majority and the opposition (Chega and PS) want a focus on tax cuts for those on the lowest incomes.