How to file your income taxes in Portugal in 2025

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.

Read on to learn about the basics of Portuguese income tax, including advice on the following:

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.

Despite this, most tax residents must fill out an annual tax return, and married couples can opt for joint taxation. Income tax applies to six categories of earnings (categories A-H), as follows:

• A: income from employment, including salaries, commissions, and fringe benefits, taxed at 13% 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.
• F: rental income from properties in Portugal. Taxed at 25–28%, depending on when the contract was signed or renewed. Alternatively, you can choose to be taxed at progressive income tax rates.
• G: capital gains from selling Portuguese properties, assets, or shares. They pay 28% tax on 50% of the gain.
• H: pension income. 25% of employee contributions to private pensions in Portugal are tax-deductible.

Latest news about income taxes in Portugal in 2025

As part of its 2025 State Budget, the Portuguese government announced a series of income tax changes.

• The earnings threshold for each income tax bracket will be increased by 4.6%, meaning taxpayers should be able to keep a little more of their earnings.
• The income tax system for young people (Youth PIT) will be extended to allow young taxpayers to benefit from income tax exemptions for up to 10 years.
• Work-based bonuses and profit-sharing awards will now be exempt from income tax, up to a limit of 6% of the employee’s annual salary.
• The new IFICI tax regime will be introduced to replace Portugal’s Non-Habitual Residency regime, which closed to new applicants at the end of 2023.

Tax rates: how much tax will I pay in Portugal in 2025?

Income tax rates in Portugal are progressive, meaning you pay more tax the more you earn.

The table below shows Portugal’s income tax brackets for 2025 and 2024. In 2025, rates vary from 13% to 48%, with the top rate only payable on earnings above €83,696.

2025 income 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%

2024 income tax brackets and rates

Income tax bracket	Tax rate
€0-€7,703	13.25%
€7,704-€11,623	18%
€11,624-€16,472	23%
€16,473-€21,321	26%
€21,322-€27,146	32.75%
€27,147-€39,371	37%
€39,372-€51,997	43.5%
€51,998-€81,199	45%
€81,200 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 in 2025, up from five years in 2024.

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, which are based on the Social Support Index. For 2025, 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 have lived in Portugal for at least 183 days (consecutive or not) in total during a tax year.
• You have lived in Portugal for less than 183 days but had a permanent residence there on 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) tax code

The NHR tax code offered preferential tax rates and exemptions for 10 years to qualifying foreign residents of Portugal. It closed to new applicants on 31 December 2023, but those who started applying before then have until 31 March 2025 to complete their application.

IFICI scheme

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 specifics of the scheme are yet to be 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?

If you work and earn money in Portugal, you’ll almost always need to pay income tax. In 2025, residents have a general tax allowance of €4,349 a year (up from €4,104 in 2024). If you earn less than this, you won’t need to pay.

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 2024 earnings is from 1 April to 30 June 2025.

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 general allowance of €4,349 (up from €4,104 in 2024).
• 150% of the amount paid in union fees (limited to 1% of employment income)
• Employee social security contributions to mandatory schemes if higher than €4,349
• Maintenance and conservation expenses paid out on property yielding a rental income.
• A deduction of €600 per dependent. This figure increases by €126 for each dependent under three years old. An additional deduction of €150 for second and following dependents aged between four and six may also be allowed.

Credits

Portuguese residents are entitled to the following 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%	€502
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 for under-35s €350 for 35 to 50-year-olds €300 for over-50s

In addition to this, certain daily expenses also are exempt from Portuguese income tax, including the following areas:

• Meal allowance up to €10.20 per day (up from €6 in 2024).
• 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

Income tax refunds

If you have paid too much income tax, you may be entitled to a refund. The tax authorities will inform you if this is the case after you have filed your tax return.

However, in the event of a dispute over your Portuguese income tax assessment, you may be able to appeal to the tax administration.

Read 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.

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

Financial penalties for filing late or incomplete Portuguese tax returns, range from €200 to €2,500.

Late payments can be penalized from 10% of the outstanding tax to double its value up to a maximum of €55,000 (plus interest).

Income tax advice in Portugal

Doing your taxes in Portugal can be a complex matter. The information here provides a general overview, but you should always get professional advice from a financial expert regarding your individual situation.

There are also specialized companies that assist internationals with their tax affairs. These include:

• 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

Useful resources

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