The 2026 Portuguese Withholding Tax Tables have been published, allowing taxpayers to determine the income tax rate that will apply to their earnings.
In this article, we explain how the 2026 withholding tax tables work, the main changes introduced, and the factors that influence the amount of tax deducted from your income each month.
Withholding Tax 2026: Key Changes Explained
What Is Withholding Tax?
The Portuguese Government has published the new withholding tax tables for 2026 in the Official Gazette (Diário da República). The updated rates apply to both employment income and pensions.
Withholding tax is the amount of Personal Income Tax (IRS) deducted each month from employment income and pension payments.
The deducted amount is paid directly by the employer or paying entity to the Portuguese Tax and Customs Authority (Autoridade Tributária) and constitutes an advance payment of the income tax that will ultimately be calculated when the annual IRS tax return is submitted.
For this reason, the monthly amount withheld does not necessarily correspond to the final tax liability. Depending on the taxpayer’s overall tax position, the annual assessment may result in either a tax refund or additional tax being payable.
How Do the Withholding Tax Tables Work?
The 2026 withholding tax tables are based on a progressive marginal tax rate system, bringing monthly withholding calculations closer to the methodology used when calculating the final annual IRS liability.
This approach helps prevent situations where a small increase in gross income could result in a lower net salary, ensuring that the tax withheld remains proportional to the taxpayer’s income.
What Determines the Amount of Tax Withheld?
The amount of IRS withheld each month depends on several factors, including:
- Gross monthly income;
- Type of income (employment income or pension);
- Marital status;
- Number of income earners within the household;
- Number of dependent children;
- Region of residence, where applicable.
Each taxpayer should consult the withholding tax table corresponding to their personal circumstances in order to determine the applicable withholding rate.
Is There an Income Threshold for Exemption?
The withholding tax tables establish income thresholds below which no IRS withholding is required.
These thresholds are updated whenever there are legislative changes or adjustments to the Portuguese income tax brackets and are intended to protect taxpayers on lower incomes.
Self-Employed Individuals
Self-employed individuals who are subject to withholding tax must apply the rates established under the Portuguese Personal Income Tax Code (IRS Code) according to the nature of their professional activity.
For many professional activities, the standard withholding tax rate remains 23%, without prejudice to the legal situations in which exemption from withholding tax applies.
Under the 2026 withholding tax tables, employment income of up to €920 per month remains exempt from IRS withholding.
For detailed information and the official withholding tax tables, please consult this link of the Portuguese Tax and Customs Authority (Autoridade Tributária) website.