Income tax — withholding

A marginal tax, worked out every month

Withholding at source (retenção na fonte) is the IRS income tax your employer deducts from each salary and hands to the State on your behalf, in advance. It is not a separate tax: it is a down-payment on the IRS you build up over the year, so what reaches your account is already net of tax — you do not have to set money aside to settle the IRS later, because it has already come off each payslip.

The amount is not fixed. It is read from marginal tables published each year by decree — for 2026, Despacho n.º 233-A/2026, for Mainland Portugal. Marginal tables work in bands: each level of pay has a top marginal rate that climbs by bracket as pay rises, the highest being 47,17%. So a higher gross keeps a proportionally larger slice, and there are no abrupt jumps between brackets.

The figure withheld each month comes from applying the decree’s formula to your pay: take the monthly pay, multiply by the top marginal rate for the bracket, and subtract an amount to deduct (parcela a abater); if you have dependents, subtract a further additional amount per dependent. The result can never fall below zero. That is why two similar salaries can carry quite different withholding once the household situation is taken into account.

Which table applies to you

The table depends on your household situation and on whether you have dependents. For employment income on the Mainland there are three tables: one for a person who is unmarried with no dependents (or married with two earners); one for a person who is unmarried with one or more dependents; and a third for a married single earner. Each has its own additional amount per dependent, so the same gross salary produces a different net depending on the household. The calculator lets you pick the situation and the number of dependents precisely so it can walk the right table.

For lower salaries, the decree provides a minimum-subsistence protection (mínimo de existência): in the first bands of the tables, withholding is capped by a formula that ramps it down gradually, so that net pay does not fall below a subsistence floor. It is the mechanism that ensures that, at the level of the minimum wage, the IRS withheld is zero.

There is also relief for larger families: for taxpayers with three or more dependents, the top marginal rate of the bracket is reduced by one percentage point, with the deducted amounts left unchanged. In the calculator, choosing “3+” dependents applies that reduction and flags it on the result.

Monthly withholding is not the annual IRS

This is the point that matters most — and the one that confuses people. What the table computes is the monthly withholding: an advance on the tax, charged month by month on each salary. The IRS you actually owe is settled only the following year, in the annual assessment (liquidação anual), when the tax authority applies the annual brackets (art. 68.º of the IRS Code) to the year’s taxable income, after the specific deductions and the deductions from the collectable amount. That reconciliation may produce a refund, if you withheld too much, or a bill, if you withheld too little.

In other words: the annual brackets of art. 68.º do exist, but they are the basis of the yearly reconciliation, not the number that comes off your salary each month. The marginal model in place since 2023 was designed precisely to bring monthly withholding close to the final tax, so for most people with a single source of income the month and the year end up close. Even so, they are distinct calculations, and this page — like the calculator — deals only with the first.

Mainland, and what is left out

The tables described here are the Mainland (Continente) ones. Madeira and the Azores enact their own tables, with reduced values, so withholding in those regions is different. Also outside the default calculation are the specific tables for people with a disability and the uplift for supplementary work — these are stated boundaries of this first version, not silent omissions. Withholding comes off the gross after social security; to see the combined weight, see the frequently asked questions.

The full content of this page is still being written.