Portugal’s 2027 Budget Cuts IRS Income Tax by About €550 Million
Portugal's 2027 budget plan cuts IRS income tax by about €550 million through new brackets and deductions, and puts €270 million into climate recovery.
Portugal’s government plans to lower personal income tax by about €550 million under its draft State Budget (Orçamento do Estado) for 2027. Finance Minister Joaquim Miranda Sarmento gave the figure at a parliamentary hearing on Nov. 6, according to the regional outlet Diário do Distrito.
The cut applies to IRS (Imposto sobre o Rendimento das Pessoas Singulares, Portugal’s personal income tax), which every resident who earns a salary, pension or self-employed income in Portugal pays, including foreigners living in Lisbon.
How the €550 million IRS cut is built
The relief comes from three changes to how IRS is calculated, according to the report:
- Updated tax brackets (escalões), the income bands that set which rate applies to each slice of earnings.
- A change to the specific deduction (dedução específica), a fixed amount taken off employment and pension income before tax is worked out.
- A change to the minimum subsistence amount (mínimo de existência), the income level below which a household pays no IRS.
The report did not give the new bracket limits or deduction amounts, and it did not say how the €550 million is split among the three measures.
What it means for people paying IRS in Portugal
Changes to brackets, the specific deduction and the minimum subsistence amount affect the tax withheld from monthly pay and pensions, and the final settlement when the annual IRS return is filed. People on lower incomes are the ones most directly touched by any change to the minimum subsistence amount, while bracket updates reach taxpayers across the income range.
The measures are part of a budget proposal, so they still depend on parliament. Diário do Distrito described the plan as continuing the tax-easing approach the government has followed in recent years.
€270 million for climate recovery under PTRR
The same budget proposal sets aside €270 million for the Portugal Transformação, Recuperação e Resiliência programme (PTRR, Portugal’s transformation, recovery and resilience programme). The money is meant to help areas hit by extreme weather recover and to prepare the country for future weather events, the outlet reported.
Growth and debt forecasts behind the plan
At the hearing, Miranda Sarmento said Portugal’s economy is growing faster than the eurozone and European Union averages. The government forecasts growth of 2.1% in 2027 and expects public finances to stay balanced.
It also projects public debt falling below 85% of gross domestic product, the total value of goods and services the country produces in a year.
Source: Diário do Distrito
