IRS tax deductions allow taxpayers to reduce the amount of tax they have to pay through certain expenses incurred throughout the year.
Every year, taxpayers have questions about which expenses qualify, the applicable limits and how these expenses should be reported to the Portuguese Tax and Customs Authority (AT).
In 2026, in the IRS tax return relating to income earned in 2025, several categories of expenses may qualify for tax deductions, including general and family expenses, healthcare, education, housing, alimony and care-home expenses.
In this article, we explain the main tax deductions available and their respective limits.
IRS tax deductions: Which expenses can you deduct?
Tax deductions correspond to certain amounts that can be deducted from the calculated tax liability.
It is important to clarify that a tax deduction does not necessarily mean that the taxpayer will receive that amount as a refund. Deductions reduce the tax due and, subsequently, withholding tax and advance payments are taken into account to determine whether there is still tax to pay or whether the taxpayer is entitled to a refund.
Here are some of the main deductions available in 2026.
1 – General and family expenses
This category includes many of the household’s everyday expenses, provided they meet the legal requirements and are correctly reported to the Tax and Customs Authority.
Examples may include expenses related to supermarkets, electricity, water, gas, telecommunications, fuel, clothing and other goods and services that do not fall under a specific deduction category.
The deduction corresponds to:
- 35% of the expenses, up to €250 per taxpayer;
- In the case of joint taxation, the limit can reach €500, corresponding to €250 per taxpayer;
- For single-parent households, the deduction is 45% of the expenses, up to €335.
2 – Healthcare expenses
Healthcare expenses are also one of the main IRS tax deductions.
Eligible expenses may include consultations, examinations, treatments, medicines and other healthcare goods or services that meet the requirements established by law.
The deduction corresponds to:
- 15% of healthcare expenses and health insurance premiums;
- Up to a global limit of €1,000 per household.
Healthcare expenses subject to the standard VAT rate may qualify when properly supported by a medical prescription. The relevant information must be associated with the corresponding expense in the e-Fatura system.
It is also important to check that invoices are correctly classified in e-Fatura, as the nature of the service provider’s activity may affect the category under which the expense is considered.
3 – Education and training expenses
Education and training expenses may also qualify for an IRS deduction.
These may include expenses relating to:
- Nurseries;
- Kindergartens;
- Schools;
- Educational establishments;
- Vocational training;
- School books and textbooks;
- School canteen meals.
The general rule allows 30% of education and training expenses to be deducted, up to a limit of €800.
However, there are situations in which this limit may be increased.
For example, where rent is paid for students living away from home who are aged 25 or under, the deduction may reach €1,100, provided the legal requirements are met.
Specific increases may also apply to education and training expenses for students attending educational establishments located in certain inland areas of Portugal or in the Autonomous Regions.
4 – Housing and rental expenses
Housing-related expenses may also be taken into account for IRS purposes.
It is currently possible to deduct 15% of rent paid for permanent housing, within the limits established by law.
For income earned in 2025, the general deduction limit is €800.
However, higher limits may apply to taxpayers with lower taxable income:
- Up to €1,100 for taxpayers whose taxable income falls within the first tax bracket;
- For taxable income above the first bracket and up to €30,000, a calculation formula is used to determine an intermediate limit between €800 and €1,100.
There are also deductions relating to interest on loans for own permanent housing, but only for certain contracts entered into up to 31 December 2011.
In these cases, the deduction corresponds to 15% of the interest paid, with a general limit of €296, although a higher limit may apply to certain income levels.
5 – Alimony payments
Taxpayers who are legally required to pay alimony may also qualify for a tax deduction.
It is possible to deduct 20% of the amounts actually paid and not reimbursed, provided that the alimony has been established by a court decision or by an agreement approved in accordance with the law.
Certain specific conditions must be met, particularly concerning the recipient of the alimony and their tax household status.
6 – Care-home and home-support expenses
Expenses relating to care homes, home support and institutions providing assistance to elderly people may also be deducted.
The deduction corresponds to:
- 25% of the expenses incurred;
- Up to a global limit of €403.75.
This deduction may cover certain expenses relating to the taxpayer, their spouse, ascendants and other family members, provided the legal requirements are met.
7 – Domestic worker expenses
This is a deduction that deserves particular attention, as it was introduced more recently into the IRS system.
It is possible to deduct 5% of the amount paid as remuneration to domestic workers, up to a global limit of €200.
For the expense to qualify, the domestic worker must be properly registered with Social Security and the remuneration must comply with the applicable rules.
The amount taken into account by the Tax and Customs Authority is reported by Social Security.
8 – PPR expenses
Taxpayers who invest in Retirement Savings Plans (PPR) may qualify for a tax deduction.
The general rule allows 20% of the amounts invested to be deducted, subject to limits based on the taxpayer’s age:
- €400 for taxpayers under 35;
- €350 for taxpayers aged between 35 and 50;
- €300 for taxpayers over 50.
It is important to check the specific conditions applicable to the product and investment before claiming this deduction.
Are there other IRS tax deductions?
Yes.
In addition to the expenses mentioned above, the IRS system provides for other deductions, including:
- Expenses relating to dependants and ascendants;
- Expenses incurred by people with disabilities;
- VAT paid on certain expenses that qualify for a deduction;
- Education and rehabilitation expenses for people with disabilities;
- Domestic worker expenses;
- Certain tax benefits;
- Deductions relating to international double taxation.
The final amount of the deduction therefore depends on the taxpayer’s personal and family circumstances and on the expenses actually incurred.
Do expenses automatically appear on the IRS tax return?
In most cases, yes.
The Tax and Customs Authority uses information reported through e-Fatura, electronic rent receipts and other declarations submitted by the relevant entities.
General and family expenses, as well as certain VAT-related deductions, are generally taken into account automatically.
Healthcare, education and training expenses, housing costs, care-home expenses and domestic worker expenses are also generally taken into account based on the information available to the Tax and Customs Authority.
It is therefore important to check e-Fatura regularly and make sure that expenses are correctly classified.
Can expenses taken into account by the Tax and Customs Authority be corrected?
Yes.
If a taxpayer notices that the amounts considered by the Tax and Customs Authority do not correspond to the expenses actually incurred, certain mechanisms are available to correct the information.
For certain categories of expenses, such as healthcare, education, housing and care-home expenses, taxpayers may, under certain conditions, report the amounts in Annex H, replacing the amounts previously reported to the Tax and Customs Authority.
It is therefore essential to keep the relevant invoices and other supporting documents.
Is there an overall limit on tax deductions?
Yes.
Deductions relating to healthcare, education, housing, alimony, certain expenses qualifying for VAT deductions, care homes, tax benefits and domestic workers may, in certain situations, be subject to an overall limit based on the household’s taxable income.
For lower taxable incomes, this overall limit may not apply.
For higher incomes, a formula established by law is applied. For taxable income above €80,000, the overall limit is generally €1,000.
For households with three or more dependants, these limits may be increased by 5% for each dependant or civil godchild who is not themselves an IRS taxpayer.
In summary
Tax deductions can significantly reduce the amount of IRS payable, but it is essential to understand the limits and requirements applicable to each category of expense.
In 2026, for the tax return relating to income earned in 2025, the main deductions include:
| Type of expense | Deduction | General limit |
|---|---|---|
| General and family expenses | 35% | €250 per taxpayer |
| Healthcare and health insurance | 15% | €1,000 per household |
| Education and training | 30% | €800 |
| Permanent-home rent | 15% | €800* |
| Eligible mortgage interest | 15% | €296* |
| Alimony payments | 20% | No specific limit |
| Care homes and home support | 25% | €403.75 |
| Domestic work | 5% | €200 |
| PPR | 20% | €300 to €400, depending on age |
* Higher limits or specific rules may apply depending on the taxpayer’s taxable income and personal circumstances.
To make the most of the deductions you are entitled to, it is important to check your expenses in e-Fatura, confirm your tax household information and keep all supporting documents.
If you have questions about the tax treatment of your expenses or completing your IRS tax return, support from a certified accountant can help you avoid mistakes and ensure that all deductions applicable to your circumstances are properly taken into account.