State Budget Increases Tenant Rental Tax Deductions to €1,000

Thursday, 8 October 2026AI summary

💶 Finance 🏠 Property #expat-finances #tax-deductions #housing #state-budget

State Budget Increases Tenant Rental Tax Deductions to €1,000 — Photo: ECO

Tenants will be able to deduct up to €1,000 in housing rent from their personal income tax (Imposto sobre o Rendimento de Pessoas Singulares or IRS) in 2027, up from the current €900 limit. The government proposal maintains tax exemptions on workplace productivity bonuses up to 6% of annual base pay for companies raising salaries by 4.5%. The draft budget also updates the threshold for the high-earner solidarity surcharge (taxa de solidariedade), linking it to the ninth tax bracket.

Update: Budget Expands IRS Relief and Cuts Corporate Tax Rate

Finance Minister Joaquim Miranda Sarmento detailed additional tax measures in the draft budget, proposing a 3.88% update to IRS brackets and rate cuts across the first six brackets. The proposal also reduces the corporate income tax (Imposto sobre o Rendimento das Pessoas Coletivas or IRC) rate by one percentage point, raises the annual subsistence threshold to €13,580, and provides a €50 monthly pension increase.

Context & Explainers

Portugal’s house prices have risen faster than the EU average since 2020, and recent reports list Portugal among the countries with the largest price increases over that period. That stronger price growth has worsened affordability in Lisbon and Porto in particular, so prospective buyers and renters should check local indices and mortgage costs before deciding.

Minister of State and Finance (2024–present)
Party: Social Democratic Party (PSD), Partido Social Democrata
Background: Economist, university professor (ISEG)

Joaquim Miranda Sarmento is Portugal's Finance Minister in the AD government led by Luís Montenegro. An economist and professor at ISEG (Lisbon School of Economics & Management), he served as PSD parliamentary group leader before joining the government.

As Finance Minister, he oversees the state budget, tax policy, public debt management, and fiscal relations with the EU. His decisions on tax brackets, IRS withholding tables, housing incentives, and public spending directly affect residents' cost of living and investment climate.

The corporate income tax (Imposto sobre o Rendimento das Pessoas Coletivas or IRC) is a tax levied on the profits of companies operating in Portugal. It applies to both resident entities and non-resident entities with income generated within the country.