IRS drops in November in the Azores with withholding reduced by half

The Minister of State and Finance, Joaquim Miranda Sarmento, has determined that, in November 2026, residents of the Autonomous Region of the Azores shall bear only half of the IRS withholding tax on employment income and pensions. The measure is contained in Order no. 12610-A/2026, signed on October 14 and published in the Diário da República on October 15, 2026 (2nd series, Supplement, no. 200, Part C — Finance). The objective is to deliver the effect of the IRS rate reductions approved for 2026 incomes to Azorean families still this year.

Withholding reduced by half for one month

The order applies the withholding tax tables approved by Order no. 1179/2026, of February 3, to income paid or made available between November 1 and 30, 2026, with one adaptation: the amount to be withheld corresponds to only 50% of the value determined by those tables. The rule applies to holders resident in the Autonomous Region of the Azores and likewise covers payments that include more than one remuneration, such as the Christmas bonus.

Excluded are holders whose monthly income exceeds the upper limit of the penultimate bracket of the applicable tables. In such cases, the withholding remains unchanged, as determined by Order no. 1179/2026.

Legal framework and effects

The measure is adopted under paragraph 1 of article 99.º-F of the IRS Code, approved by Decree-Law no. 442-A/88, of November 30, and articles 99.º-C and 99.º-D of the same diploma, after consulting the Government of the Autonomous Region of the Azores. It also applies article 4 of Regional Legislative Decree no. 2/99/A, of January 20, as amended by Regional Legislative Decree no. 15-A/2021/A, of May 31.

The adjustment responds to Bill no. 108/XVII/2, approved by the Assembly of the Republic, which authorized the Government to reduce the general IRS rates applicable to the first six brackets of taxable income, with effects on income obtained during 2026. Since this reduction takes effect from January 1, 2026, the XXV Constitutional Government opted to reflect it immediately in disposable income, also incorporating the effect of withholdings already made since the beginning of the year.

Since the second half of 2023, withholding tax on employment and pensions has been based on a model of progressive marginal rates, which brings the tax withheld closer to the tax due in the annual settlement and avoids situations of regressivity.

Calendar and corrections

• Entry into force: the day following publication.
• Effective date: from November 1, 2026.
• Application period: income paid or made available between November 1 and 30, 2026.
• Rectifications: if the November withholdings do not follow the adjustments, the entity responsible for the withholding obligation may correct them in the following months, until the end of December 2026.
• From December 1, 2026: the tables of Order no. 1179/2026, of February 3, shall apply again without adaptations.

Impact for Azorean taxpayers

The measure increases the net income of families in the region as early as next month, by temporarily reducing the tax withheld on salaries and pensions by half. This is a single-month relief, which anticipates the annual effect of the IRS reduction and returns part of the tax withheld throughout 2026 to Azorean taxpayers.

Source: Diário da República, 2nd series, Supplement, no. 200, of October 15, 2026, Part C — Finance, p. 1 (official reference: Order no. 12610-A/2026).