Lisbon, July 4, 2025 (Lusa) - Finance Minister Joaquim Miranda Sarmento on Friday called on opposition parties to act responsibly to ensure that the income tax reduction the government proposed to parliament reaches taxpayers’ pockets as soon as possible.
During the debate on the proposed personal income tax reduction bill in parliament, the minister argued that the reduction should be reflected “as soon as possible” to bring forward the tax refund to taxpayers, so that families “receive their tax rebate promptly in the same year.”
In the proposal under discussion, “everything now depends on the speed of parliament and the sense of responsibility of the parties,” he said, referring to the detailed discussion of the initiative, where parties can submit proposals for amendments.
The government will update the withholding tax tables, ensuring that taxpayers feel the income tax reduction in their monthly salaries and pensions. He said that the change would take effect retroactively from January.
The minister said that, after the additional reduction of €600 million approved last year and an additional reduction of 500 million euros in 2025 that the update of the values defining the income tax brackets brought about, the government will continue to lower income tax throughout this legislative term by €2 billion, “maintaining the balance of public accounts”.
The initiative now presented provides for a reduction in rates from the first to the eighth bracket, which the Luís Montenegro government estimates will lower income tax by €500 million.
Miranda Sarmento argued that the reduction should be made “with full budgetary responsibility” and that “the budget execution for the first quarter” in national accounts and “budget execution in public accounting until May” show that this is what the Government is doing.
According to the government’s proposal, the first bracket will fall from 13% to 12.5%, the second from 16.5% to 16%, the third from 22% to 21.5%, the fourth from 25% to 24.4%, the fifth will decrease from the current 32% to 31.4%, the sixth will drop from 35.5% to 34.9%, the seventh will go from 43.5% to 43.1% and, finally, the eighth will fall from 45% to 44.6%. The rate for the last income bracket remains at 48%.
This last bracket remains unchanged, and the proposed reduction in personal income tax by the government now covers all taxpayers who must pay tax, due to the progressive nature of the tax scale. The decrease in the previous brackets means that taxpayers in the new bracket will also benefit from the reduction.
PCT/ADB // ADB.
Lusa
