Government expands IRS tax deductions for domestic work
The government has issued a new ordinance updating the rules for Annex H of the personal income tax (Imposto sobre o Rendimento das Pessoas Singulares or IRS) return to include expenses related to domestic work. Although this tax benefit was legally established last year, previous regulations failed to cover it. The update corrects this administrative oversight, allowing taxpayers to claim these deductions in their current filings.
The IRS withholding tables (tabelas de retenção na fonte) are government-published schedules that determine how much personal income tax (Imposto sobre o Rendimento das Pessoas Singulares — IRS) employers must deduct from each paycheck. They take into account gross pay, marital status, number of dependents, and disability status.
The tables are updated annually (and sometimes mid-year when budgets change), directly affecting monthly take-home pay. When tables are revised downward, workers see more in their pay packet; when raised, less. Any difference between amounts withheld and the actual tax owed is settled when the annual IRS return (Modelo 3) is filed, typically between April and June.
Employees and pensioners should check the current tables — published by the Autoridade Tributária e Aduaneira (AT) — whenever they change, as the impact on net income can be significant.
