Authorities change IRS brackets

The Portuguese tax authorities have altered their tax brackets on IRS taxed at source.

According to simulations from the Ministry of Finances, those on a minimum wage of €685 a month without dependents will gain an extra €30 a month under the new regime.
The changes to the tax brackets were published on Tuesday in the Government’s news bulletin Diário da República.
The new brackets are in line with inflation and have been automatically updated to reflect the minimum subsistence salary and the progressive adjustment between tax at source and the final value payable for Income Tax on Single Persons.
The Government also provides some simulations that reflect the additional income that will be felt by dependent employees and by pensioners this year compared to the update in tax at source.
For example, in the case of a single tax payer without dependents who earns €685 per month, the tax at source to be applied on this income will go from 4.4% to 0.1%, resulting in an additional €29:46 per month or €412.37 at the end of the year.
In the case of a single tax payer with a dependent who earns €1,100 a month, the increase is less significant: €1.10 per month and €15.40 at the end of the year. This is because, in this example, the tax variation is just 0.1 percentage points of 11.1% to 11%.
The same goes for a single tax payer with two dependents who earns €1,750 per month. In this situation, the tax also suffers this year from a variation of just 0.1 percentage points (from 17.9% to 17.8%), equivalent to an increase of just €1.75 per month or €24.5 at the end of the year.
For married tax payers without dependents and with salaries of €700 per month, the increase is even more reduced: just €0.70 per month and €9.80.
The largest variation is seen for incomes of up to €1,225 per month for married tax payers with a dependent. The tax rate in this case would fall from 9.2% in 2019 to 7% in 2020 which means an extra €26.96 in pocket per month or €377.30 at the end of the year.
And if you have two children and incomes of €1,400 per month, the increase is €16.80 per month and €235 at the end of the year.