Decree-law reducing 2026 IRS tax rates published in the Diário da República

The government has published Decree-Law 212/2026, which reduces the IRS tax rates for the first six income brackets for the 2026 tax year. Because the change is retroactive to January, the government is applying a one-time 50% reduction to income tax withholdings (retenção na fonte) on salaries and pensions paid in November. Normal withholding rates will return in December. High earners with monthly income above 20,000 euros for employees or 18,000 euros for pensioners are excluded from this 50% November reduction.