Only half the usual income tax will come off November pay, but next year's IRS refund will be smaller
Salaries and pensions paid between 1 and 30 November will have only half the usual income tax deducted at source. The government ordered this one-off cut so that people feel this year's lower IRS (Portuguese income tax) rates straight away. Parliament cut the rates for the first six tax bands by 0.3 to 0.5 percentage points, backdated to January 2026.
The cut applies to employees and pensioners in mainland Portugal. It does not apply to monthly salaries above €20,221 or pensions above €18,332. For a single person with no children earning €1,500 gross a month, the tax deducted falls from €168.17 to €84.09, according to simulations by Doutor Finanças. A pensioner on €1,200 gross keeps about €40 more.
A Christmas bonus (subsídio de Natal) paid in November gets the same cut. Public sector workers always receive it in November; private employers can pay it as late as 15 December.
If your Christmas bonus is paid in December, normal tax is deducted from it: only money paid in November gets the cut.
From December, tax goes back to the usual rates. The extra money is not a pay rise. Tax advisers warn that the November cut is bigger than the actual drop in tax for the year, so when you file your 2026 tax return in 2027, your refund will be smaller, and some people may have to pay tax instead. In simulations reported by Notícias ao Minuto, refunds fell by as much as 70%.
