On 30 October 2026, the Tax Authority issued Circular No. 5/2026, approving the withholding tax tables for dependent work income and pensions applicable in mainland Portugal for November 2026. These tables reflect the annual IRS bracket updates indexed to the GDP deflator and the State Budget 2026 measures, including the increased tax-free allowance and adjusted solidarity surcharge thresholds. The circular revokes the October 2026 tables and mandates application to all salaries, pensions, and similar remuneration processed from 1 November 2026. Payroll providers and multinational employers with staff in mainland Portugal must integrate the new brackets into their systems before the November payroll run to avoid under- or over-withholding, which could trigger interest charges or refund claims under Article 101 of the IRS Code.
Key Takeaways
- Bracket Indexation: The 2026 tables incorporate a 3.2% inflation adjustment, shifting income thresholds upward and reducing effective tax rates for middle-income earners.
- Solidarity Surcharge: The additional 2.5% surcharge on annual income above €80,000 remains, but the threshold is now prorated monthly, affecting high-earner withholding calculations.
- Pension Specifics: Separate columns for pension income maintain the 50% exemption on the first €4,104 of annual pension, requiring careful application in mixed-income scenarios.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement