How to calculate and pay IRS income tax in Portugal

Establish your tax residency and the tax period

A Portuguese tax resident usually declares worldwide income: salary, self-employment, rent, interest, dividends and capital gains in Portugal and abroad. For a new resident the date residency begins matters most: in the year of the move the period may be split into a resident and a non-resident part.

Non-residents usually pay Portuguese tax only on income treated as earned in Portugal. The 183-day rule matters, but it is not the only one: residency can also arise if you have a home that looks like your permanent place of residence. Check your address and the date of your status on Portal das Finanças (the tax portal).

Sort your income into tax categories

IRS is Imposto sobre o Rendimento das Pessoas Singulares (personal income tax). Salary falls under category A, self-employment under B, investment income under E, rent under F, capital gains under G and pensions under H. The rules for working out the taxable base and any special rates differ between categories.

Do not confuse turnover with taxable income. For example, under the regime simplificado (simplified regime) for category B, a coefficient set by law is applied to revenue, but that is not the tax rate. Once the base is worked out, the progressive scale is usually applied to it. Segurança Social (social security) contributions are calculated separately and are not part of IRS.

Dividends and some other investment income are often taxed at a flat rate of 28%, but sometimes you can choose englobamento (adding it to your total income). Rent and capital gains have their own rules. This choice has to be worked out for the whole category concerned, taking into account foreign tax and the double taxation agreement.

State support is a separate question: it is neither a salary nor payment for services, and it does not fall into a category by itself. That is exactly what happened with the one-off payment for moving to the interior (up to €5,317.59 in 2026): neither the programme page nor its regulations say a word about income tax. It is worth checking with an accountant or the employment service itself before filing your return, especially as the money comes in two parts and in different calendar years. About the payment itself — Payment for moving to the interior.

Apply the scale for the year the income was received

For income in 2025, declared in 2026, the scale for mainland Portugal is: up to €8,059 — 12.5%; €8,059–⁠12,160 — 16%; €12,160–⁠17,233 — 21.5%; €17,233–⁠22,306 — 24.4%; €22,306–⁠28,400 — 31.4%; €28,400–⁠41,629 — 34.9%; €41,629–⁠44,987 — 43.1%; €44,987–⁠83,696 — 44.6%; over €83,696 — 48%.

For income in 2026, to be declared in 2027, the thresholds have been raised and the rates for the second to fifth bands cut: up to €8,342 — 12.5%; €8,342–⁠12,587 — 15.7%; €12,587–⁠17,838 — 21.2%; €17,838–⁠23,089 — 24.1%; €23,089–⁠29,397 — 31.1%; €29,397–⁠43,090 — 34.9%; €43,090–⁠46,566 — 43.1%; €46,566–⁠86,634 — 44.6%; over €86,634 — 48%. On the part of taxable income above €80,000 a taxa adicional de solidariedade (additional solidarity surcharge) may also apply: 2.5% up to €250,000 and 5% above that. Madeira and the Azores have their own regional scales.

The scale works in bands: the higher rate applies not to all of your income, only to the part within that band. For example, with a taxable base of €22,000 on the 2026 scale, the tax before deductions comes to about €3,825, an effective rate of about 17.4%, not 24.1%. Gross income may differ from the taxable base.

For income in 2026, to be declared in 2027, the thresholds have been raised and the rates for the first six bands cut by Decreto-Lei no. 212/2026 of 4 November 2026, backdated to 1 January: up to €8,342 — 12.2%; €8,342–⁠12,587 — 15.2%; €12,587–⁠17,838 — 20.7%; €17,838–⁠23,089 — 23.6%; €23,089–⁠29,397 — 30.6%; €29,397–⁠43,090 — 34.6%; €43,090–⁠46,566 — 43.1%; €46,566–⁠86,634 — 44.6%; over €86,634 — 48%. On the part of taxable income above €80,000 a taxa adicional de solidariedade (additional solidarity surcharge) may also apply: 2.5% up to €250,000 and 5% above that. Madeira and the Azores have their own regional scales.

The scale works in bands: the higher rate applies not to all of your income, only to the part within that band. For example, with a taxable base of €22,000 on the 2026 scale, the tax before deductions comes to about €3,732, an effective rate of about 17%, not 23.6%. Gross income may differ from the taxable base.

Check a joint return, tax breaks and deductions

Spouses and de facto partners can compare filing separately and jointly. Under tributação conjunta (joint taxation) the couple's combined taxable income is divided by two, the scale is applied and the result is multiplied by two. So this option may pay off when the spouses' incomes are very different, but it is best to check both results in the return simulator.

Next, deduções à coleta (tax deductions) are subtracted from the calculated tax: general household expenses, health, education, registered rent, housing costs where the law allows, dependants and part of the expenses with a confirmed NIF. Check your invoices in e-Fatura (the invoice register). Deductions are capped by law and depend on the make-up of the household and total income.

Check separately IRS Jovem (the tax break for young taxpayers), the old NHR — Residente Não Habitual (the non-habitual resident regime) if you still have it, IFICI — Incentivo Fiscal à Investigação Científica e Inovação (the tax break for research and innovation), foreign tax credit and other special regimes. A tax break is not automatically better than the ordinary scale: you need to compare the results.

File the annual return

File Modelo 3 de IRS (the annual IRS return) on Portal das Finanças (the tax portal). The return for the previous calendar year is usually filed from 1 April to 30 June. Some employees and pensioners can use IRS Automático (the automatic return), but before confirming it still check your income, withholding, household and IBAN.

Add the annexes for your categories of income: for example, Anexo A (salary), Anexo B or C (self-employment), Anexo F (rent), Anexo G (capital gains), Anexo J (foreign income and accounts). First run the simulação (preliminary calculation), compare filing jointly and separately, and keep the receipt after submitting.

If the return gets the status «com anomalias» or «declaração com divergências», open the message and correct the details or attach supporting documents. Do not send a new return without understanding the reason: a later declaração de substituição (replacement return) supersedes the previous one.

Get the final assessment and check the payments credited

Once the return is processed, Autoridade Tributária e Aduaneira (the tax and customs authority) issues the Nota de Liquidação (the final IRS assessment). It shows the taxable base, the tax charged, deductions, retenção na fonte (withholding at source), pagamento por conta (payments on account) and the bottom line: an amount to pay or a refund.

Tax withheld from your salary or recibos verdes (self-employed receipts) is neither the final rate nor a tax on top of the annual IRS. It is an advance already paid: it will be credited in the annual calculation. If more was withheld than the final tax, you get a refund; if less, you pay the difference.

Also download the Demonstração de Liquidação (breakdown of the assessment) and, if you owe money, the Nota de Cobrança (payment notice). Banks, landlords and public bodies often ask for these documents.

Pay the amount in the notice

Open the payment on Portal das Finanças (the tax portal) in the Pagamentos (payments) section. Use the referência de pagamento (payment reference) given in the Nota de Cobrança (payment notice): you can usually pay by Multibanco, online banking, MB Way or another method offered on the portal. Go by the amount and the deadline in your own document.

After paying, check Movimentos Financeiros → Informação Financeira (financial transactions → financial information). The Valor Regularizado (amount settled) may not update instantly. By opening the document and the Pagamentos (payments) tab you can see the credited transaction and the date it was accepted.

If you do not have the full amount, the debt is split into monthly instalments — this is a plano prestacional (instalment plan). You must ask for it not «some time», but within 15 days after the payment deadline: while those two weeks run, the request is made on the portal under «Planos Prestacionais > Simular/Registar pedido» and under normal conditions it is approved straight away. You can get up to 36 instalments, the smallest being €25.50. No guarantee is required if the debt is no more than €5,000 or if you ask for no more than twelve instalments.

If you do nothing, the tax authority will set up a plan itself after those same 15 days — but only for a debt of up to €5,000 and with its own number of instalments. For a larger debt the case goes to execução fiscal (tax enforcement), and costs are added to the amount. Interest runs in any case, from the day after the deadline. More on instalments, guarantees and enforcement in a separate guide.

Deal with self-employed payments on account separately

A trabalhador independente (self-employed worker) may start getting pagamentos por conta (IRS payments on account) after a few years in business. This is not a separate tax: the amounts are credited when IRS is calculated for the year they relate to. The tax authority works out the amount from earlier data, so it may not match your current income.

Each payment comes as a separate document with its own amount and date. Do not copy the figure from an old Nota de Liquidação (final assessment) without checking the latest notices: the formula for payments on account has changed since 2025. The law lets you reduce or skip a payment if withholding and the payments already made are enough to cover the expected tax, but if you get it wrong interest may be charged — do the calculation first.

Paying and checking that the payment has gone through work the same way as for ordinary IRS: through Pagamentos (payments), then through Movimentos Financeiros (financial transactions).