IRS withholding drops by half in November for workers and pensioners

The Minister of State and Finance, Joaquim Miranda Sarmento, has determined that the IRS withholding tax on employment income and pensions paid or made available in November 2026 shall be reduced by half. The decision is contained in Order no. 12523-A/2026, dated October 13, published in the Diário da República, 2nd series, no. 199 (supplement), dated October 14, 2026, and covers workers and pensioners resident in Portuguese territory, with the exception of the Autonomous Regions of the Azores and Madeira.

Since the second half of 2023, the withholding tax on these incomes has been based on a model of progressive marginal rates, which brings the tax withheld closer to the tax due in the annual settlement of the Personal Income Tax (IRS), avoiding situations of regressivity. The reduction of the tax burden on individual incomes is assumed as a priority of the XXV Constitutional Government, reflecting the choice to let the results of economic performance and the rigorous management of public accounts be reflected in the disposable income of families.

In this context, the Assembly of the Republic approved Bill 108/XVII/2, which authorized the Government to reduce the general IRS rates applicable to the first six taxable income brackets, with effects regarding income obtained during the year 2026. As this reduction takes effect from January 1, 2026, the order seeks to ensure that its benefits are reflected, as quickly as possible, in the net disposable income of taxpayers, likewise incorporating the corresponding effect of the withholdings made since the beginning of the year.

Half of the withholding during the month of November

Order no. 12523-A/2026 determines that, for income paid or made available between November 1 and 30, 2026, the withholding tax tables approved by Order no. 233-A/2026, dated January 6, apply, with the adaptations provided for in the new legal instrument. The amount of the withholding to be carried out corresponds to the value determined under those tables, with only 50% of that value being applicable.

The measure is adopted under paragraph 1 of article 99.º-F of the IRS Code, approved by Decree-Law no. 442-A/88, dated November 30, and applies to the tables referred to in articles 99.º-C and 99.º-D of the same instrument. The adjustment also applies to cases where the payment includes more than one remuneration, as is the case, notably, with the payment of the Christmas bonus.

Exceptions and scope of application

• Excluded from the reduction are income holders whose monthly value exceeds the upper limit of the penultimate bracket of the applicable withholding tables; in such cases, the amount determined under Order No. 233-A/2026, of January 6, remains unchanged.
• The adaptation covers only income paid or made available to holders resident in Portuguese territory, with the exception of the Autonomous Regions of the Azores and Madeira.
• In cases where the payment includes more than one remuneration, such as the Christmas bonus, the 50% reduction likewise applies.

Return to normal tables in December

As of December 1, 2026, the withholding tax tables approved by Order No. 233-A/2026, of January 6, will apply again, without the adaptations of the new order. In situations where the withholdings on November income were not carried out according to the planned adjustments, the entity responsible for the withholding obligation may proceed with the respective rectification in the withholdings to be made in the following months, until the end of December 2026.

The order enters into force on the day following its publication and takes effect from November 1, 2026.

For workers and pensioners in the mainland, the measure translates into a one-time increase in net income as early as next month, by returning half of the tax that would have been withheld, and brings forward to November the effect of the IRS reduction approved for 2026, which would otherwise only be reflected in the annual settlement. The relief is, nonetheless, temporary and does not cover the highest incomes nor residents in the autonomous regions.

Source: Diário da República, 2nd series, no. 199 (supplement), of October 14, 2026, Part C — Finance, p. 1 (official reference: Order No. 12523-A/2026).