Minister assures tax neutrality for salary increases up to 4.5%

The Minister of Finance stated that the 2027 State Budget proposal ensures 'tax neutrality' for salary increases of up to 4.5%. This is achieved by updating IRS brackets by 3.88%, raising the 'mínimo de existência' (subsistence threshold), and maintaining the previously proposed reductions in IRS rates, ensuring that individuals receiving such raises will pay less IRS in 2027 than in 2026.

Why it mattersIf you receive a salary increase of up to 4.5% next year, this policy change is intended to prevent 'bracket creep,' meaning your increased income will not be eroded by higher taxes and you should see a lower overall tax burden compared to 2026.

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Government needs 200 million more to complete promised IRS tax cuts

The 2027 State Budget proposal includes a 550 million euro tax relief through updated tax brackets and specific deductions, which adds to the 400 million euro reduction in tax rates scheduled for this year—the latter of which will be voted on this Friday, October 9. The government also confirmed that salary increases up to 4.5% will remain tax-neutral, ensuring that workers' net income rises rather than being absorbed by higher taxes, and set the new minimum wage at 970 euros per month with an increased tax-free minimum threshold of 13,580 euros.

Observador· 23m agoRead original ↗

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Labor & Taxes

Tax burden remains at 35% in 2027 thanks to increased employment and wages

The government projects that Portugal's tax burden will remain stable at 35% of GDP in 2027. This stability is expected because growth in social security contributions, driven by higher employment levels and wage increases, will offset the revenue losses from planned IRS tax cuts.

Expresso· 25m agoRead original ↗

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Minister assures tax neutrality for salary increases up to 4.5%

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