How to file your income taxes in Portugal in 2026

Whether you work in Portugal or have retired, you’ll typically need to pay income tax on your earnings. Portugal’s income tax system is relatively straightforward, with residents taxed progressively and non-residents paying a flat tax rate. 

However, in the last few years, Portugal has made some changes to how their tax system works for expats to attract skilled internationals. For many expats, managing finances across borders is a key part of navigating tax obligations, with international money transfers often necessary for tax payments and receiving income from abroad.

Providers like Wise can offer cost-effective solutions for expats to manage their finances in multiple currencies. Read on to find out more about these topics:

Income tax in Portugal: overview and latest developments

The Tax and Customs Authority (Autoridade Tributária e Aduaneira) administers income tax in Portugal.

If you live and work in Portugal, you’ll typically need to pay Portuguese income tax on your earnings. Portugal operates a pay-as-you-earn (PAYE) tax system, where employees usually have their tax contributions deducted automatically from their salary.

Most tax residents in Portugal need to fill out an annual tax return, and married couples can opt for joint taxation. Income tax applies to the following six categories of earnings (A–H):

• A: income from employment, including salaries, commissions, and fringe benefits, taxed at 12.5% to 48%.
• B: income from self-employment, for example, if you’re a freelancer or run a business in Portugal.
• E: income from investments, including profits from investments and assets, bank deposits, bonds, and dividends. Taxed at a flat rate of 28% after the allowed deductions, or you can choose to include this income for taxation at the standard progressive rate.
• F: rental income from properties in Portugal. Taxed at a flat 25% rate if you’re a non-resident, or at your general progressive income tax rate if you’re a tax resident.
• G: capital gains from selling Portuguese properties, assets, or shares. This is a 28% tax, or you can choose to add the income gains to your general income and pay tax at your standard progressive rate.
• H: pension income, taxed at the general progressive rate.

Latest news about income taxes in Portugal in 2026

The 2026 State Budget in Portugal was approved in November 2025. Key changes include:

• The earnings threshold for each income tax bracket will be increased by 3.5%, meaning taxpayers should be able to keep a little more of their earnings.
• There is no withholding tax on the first €920 per month, or up to €12,880 per year (the standard Portuguese pay basis is 14 months).
• Tax-exemption for employment productivity bonuses has been extended.

Tax rates: how much tax will I pay in Portugal in 2026?

Income tax rates in Portugal are progressive, meaning you pay more tax the more you earn. The tables below show Portugal’s income tax brackets for 2026 and 2025.

2026 Portugal tax brackets and rates

As of 2026, Portugal has nine income tax brackets, with the highest making €86,634 or more per year. Depending on how much money you earn, expect to pay between 12.5 to 48% tax on your Portuguese income for 2026.

Income tax bracket	Tax rate
€0–8,342	12.50%
€8,343–12,587	15.7%
€12,588–17,838	21.2%
€17,839–23,089	24.1%
€23,090–29,387	31.1%
€29,388–43,090	34.9%
€43,091–46,566	43.1%
€46,577–86,634	44.6%
€83,635 and above	48%

2025 Portugal tax brackets and rates

Income tax bracket	Tax rate
€0–8,059	13%
€8,060–12,160	16.5%
€12,161–17,233	22%
€17,234–22,306	25%
€22,307–28,400	32%
€28,401–41,629	35.5%
€41,630–44,987	43.5%
€44,988–83,696	45%
€83,697 and above	48%

Solidarity tax

An additional solidarity tax ranging from 2.5% to 5% applies for taxpayers earning more than €80,000 a year.

Tax rates for non-residents and young people

Non-residents are taxed at a flat rate of 25% of their taxable Portuguese income.

Young people aged 18 to 35 who aren’t considered dependents can benefit from the Youth PIT (IRS Jovem) program. This offers 10 years of preferential tax rates.

Under the new rules, the exemptions will be:

• 100% in the first year of employment
• 75% from years 2–4
• 50% from years 5–7
• 25% from years 8–10

Maximum earning caps apply and are based on the Social Support Index. For 2026, the maximum amount of exempt income is 55 times the value of the Social Support Index. At current rates, the limit would be €28,009.

Who pays income tax in Portugal?

Who needs to file a tax return in Portugal?

Regardless of your employment status in Portugal, you’ll usually need to fill out an annual tax return if you are a tax resident. Married couples in Portugal who are taxed jointly on their income should submit a joint return.

There are some exceptions. For example, if you are an individual taxpayer whose tax is fully withheld at source by their employer, you may not be required to submit a return.

Portuguese income tax for foreigners

Income tax rules in Portugal vary depending on whether you’re classified as a resident or non-resident. Residents must pay Portuguese income tax on their worldwide income, while non-residents only need to pay tax on Portuguese earnings.

Workers are considered tax residents in Portugal if either of the following rules applies:

• You lived Portugal for at least 183 days (consecutive or not) in total during a tax year
• You lived in Portugal for less than 183 days but had a permanent residence there as of 31 December

Internationals who have lived in Portugal for less than 183 days and don’t have permanent residence status are non-residents for tax purposes.

Non-Habitual Residency (NHR)

The now-closed NHR tax program offered preferential tax rates and exemptions for 10 years to qualifying foreign residents of Portugal. It closed to new applicants on 31 December 2023.

IFICI scheme (NHR 2.0)

The NHR scheme has effectively been replaced by a new employment-based scheme – the Fiscal Incentive for Scientific Research and Innovation Program (IFICI).

The scheme is focused on attracting international workers for specific jobs in ‘highly qualified’ professions, such as teachers and scientific researchers. The new scheme will allow those who qualify to pay tax at a flat rate of 20% for up to 10 years. Some details about the scheme are still being confirmed.

Double taxation treaties

Portugal has tax treaties with all EU countries and several countries outside the EU to prevent double taxation.

A 2003 European Union directive regarding taxation of interest on savings income moved from one member state to another can also help internationals ensure that they are taxed fairly. However, if you are filing any of the following, make sure you’re clued up on all the rules:

• UK tax from abroad
• Canadian taxes
• US taxes

Who is exempt from Portuguese income tax?

Unlike many European countries, Portugal doesn’t have an annual tax allowance. Instead, it has a minimum subsistence threshold (mínimo de existência), below which there is generally no income tax due.

In 2026, the mínimo de existência is €12,880 a year. If you earn less than this, you usually won’t need to pay income tax.

How do you file your tax return in Portugal?

The Portuguese tax year runs from 1 January to 31 December. The window for completing your Portuguese tax return for 2025 earnings is from 1 April to 30 June 2026.

How to register for tax in Portugal?

Before engaging in employment or any other professional activity in Portugal, you must fill out a registration form and submit it to your local tax office. The office will then issue your Portuguese income tax number.

Which forms do I need to fill out?

To complete the Portugal tax form, you must register on the government’s website and request a password. It is obligatory to file your tax return online via the tax portal.

Deductibles and tax relief

Portugal has a number of general allowances that residents can deduct from their taxable earnings or use as tax credits to reduce their income tax.

Below are some tax deductions and tax credits foreigners can consider when filing a Portuguese tax return.

Deductions

• A minimum subsistence threshold of €12,880, below which no income tax is generally paid
• 150% of the amount paid in union fees (limited to 1% of employment income)
• Employee social security contributions to mandatory schemes if higher than €4,350
• Maintenance and conservation expenses paid out on property yielding a rental income
• A deduction of €600 per child aged over 3 years old, €726 per child aged under 3 years old, and €900 per child under 3 if it’s the second or subsequent child

Tax credits

Portuguese residents are entitled to the following tax credits:

Expense	Percentage	Limit (if applicable)
General family expenses	35%	€250 per taxpayer
Healthcare	15%	€1,000
VAT on invoices issued by car repair shops, restaurants, hairdressers, and beauty salons	15%	€250 per family
Alimony pensions arising from court decisions	20%
Rent costs	15%	€700
Interest on housing loans	15%	€296
Donations made to accredited institutions	25%
Those incurred with homes and institutions supporting older or disabled people	25%	€403.75
Premiums paid on pension contributions	20%	€400 (under age 35) €350 (age 35 to 50) €300 (over age 50)

Certain daily expenses also are exempt from Portuguese income tax, including the following areas:

• Meal allowance up to €10.46 per day in 2026 (up from €10.20 in 2025)
• Daily allowance for business travel up to €62.75 within Portugal or €148.91 abroad
• Travel expenses, depending on means of transport and the number of employees traveling

How do I pay my Portuguese income tax?

If you owe tax on income that hasn’t been automatically deducted through Portugal’s PAYE system, you can pay in installments. Installments are generally due in July, September, and December.

You can pay online through the Finance Portal (Portal das Finanças) – they offer the following payment options:

• Direct debit
• MB WAY
• Multibanco (at an ATM)
• Via online banking

If you’re an expat with income or bank accounts outside Portugal, paying your Portuguese taxes might involve currency conversion.

Wise offers a more cost-effective alternative, allowing you to transfer money to Portugal using the mid-market exchange rate and low, transparent fees. You can then use the transferred funds to pay your taxes via the Portuguese Finance Portal using any of the payment methods listed above.

Income tax refunds

You might be entitled to a refund if you’ve paid too much income tax. The tax authorities will inform you if this is the case after you have filed your tax return.

However, if there’s a dispute over your Portuguese income tax assessment, you may be able to appeal to the tax administration.

Check your tax assessment letter to find out which department you need to appeal to and the appeals process. If your appeal is rejected, you can then apply to have your case assessed by the tax courts.

For expats who receive tax refunds from Portugal but maintain bank accounts in other countries, transferring your refund internationally can result in unnecessary financial fees. Wise multi-currency account allows you to hold and convert your money in multiple currencies at the mid-market exchange rate, helping you avoid excessive fees and poor exchange rates when moving your refund money internationally.

What happens if I don’t pay my income tax on time?

Financial penalties for filing late or incomplete Portuguese tax returns range from €25 to €3,750

Late payment penalties are usually a percentage of the unpaid tax, typically between 10% and 100% of the outstanding amount, plus interest.

How can I manage tax payments if I earn income in multiple currencies?

When earning income in different currencies, you’ll need to convert everything to euros for your Portuguese tax return. This can be challenging as exchange rate fluctuations affect your tax liability.

Wise helps simplify this process with its multi-currency account that allows you to receive income in different currencies and convert at the mid-market exchange rate when needed, avoiding the high conversion fees banks typically charge.

Conclusion

Managing your tax obligations as an expat in Portugal requires careful planning and financial management across borders. Having the right tools to transfer and convert money efficiently can save you significant amounts in fees and exchange rate markups.

Wise offers multi-currency accounts with linked debit cards specifically designed for people living international lives, with transparent fees and the mid-market exchange rate.

By combining proper tax planning with efficient financial management, you can ensure you meet your Portuguese tax obligations while minimizing unnecessary costs.

Income tax advice in Portugal

Doing your taxes in Portugal can be a complex matter. The information here is a general overview, but it helps to seek professional advice from a financial expert if you’re unsure about anything.

There are also specialized companies that assist internationals with their tax affairs, including:

• Anchorless – provides tax consultations
• Bordr – offers streamlined tax filing services for foreigners
• e-residence – count tax filing among their many offerings tailored to those living abroad
• JS Advisers – offers professional tax advice to residents and non-residents

Useful resources

• Autoridade Tributária e Aduaneira – Portuguese tax authority
• Portugal income tax information and forms