Latest news and stories about tax relief in government in Portugal for expats and residents.
The government has officially submitted a draft law to Parliament to reduce personal income tax (Imposto sobre o Rendimento das Pessoas Singulares or IRS) for the first six tax brackets. The Ministry of Finance expects this relief to provide savings of up to 171 euros per year for some taxpayers.
Chega has two bills in Parliament to lower fuel VAT to 13% and apply zero VAT to a basket of essential food items. The PS advocates for the same goals but through recommendations to the Government, while the IL has already managed to pass a resolution to reduce the ISP. Meanwhile, the Government is focusing on relief...
Prime Minister Luís Montenegro is scheduled to address the nation tonight at 8:00 PM from São Bento. Following a Council of Ministers meeting, he is expected to detail new tax relief for income tax (Imposto sobre o Rendimento das Pessoas Singulares or IRS) brackets up to the sixth tier and provide extraordinary supplements for pensioners earning up to 1,611 euros. The package, estimated at 800 million euros, also includes support for sectors affected by rising fuel prices.
Update: Government confirms tax relief and sector support measures
Prime Minister Luís Montenegro confirmed that the government has approved a proposal to reduce IRS rates for the first through sixth brackets, with changes retroactive to January 2026. The package also includes 38 million euros in support for sectors heavily impacted by fuel costs, such as taxi services, firefighters, and the social sector, with relief expected to appear in salary withholding tax starting in November.
Luís Filipe Montenegro Cardoso de Morais Esteves (born February 16, 1973, in Porto) is a Portuguese lawyer and center‑right politician who has served as Prime Minister of Portugal since April 2, 2024. A long‑time member of the Social Democratic Party (PSD), he is the leading figure of the post‑Troika generation of Portuguese conservatives. Montenegro was elected to the Assembly of the Republic in 2002 for the Aveiro district and remained an MP for 16 years, becoming PSD parliamentary leader from 2011 to 2017 during the bailout and austerity period under Prime Minister Pedro Passos Coelho. He was a prominent defender of strict austerity measures, arguing in 2014 that “the life of the people is no better, but the life of the country is a lot better,” a phrase that has followed his public image since. After an unsuccessful leadership bid against Rui Rio in 2020, Montenegro won the PSD leadership in 2022. He then forged the centre‑right Democratic Alliance (PSD–CDS‑PP and allies), which won a plurality of seats in the 2024 legislative election. Refusing to partner with the far‑right Chega, which he has called “often xenophobic, racist, populist and excessively demagogic,” he formed a minority government as head of the XXIV Constitutional Government on April 2, 2024. His first government fell in March 2025 after a no‑confidence vote linked to a conflict‑of‑interest affair, but fresh elections saw the Democratic Alliance increase its seat share, allowing Montenegro to return as prime minister leading the XXV Constitutional Government. His importance to Portugal lies in attempting to re‑center the traditional centre‑right after the crisis years, defending liberal‑conservative economics and EU alignment while drawing a sharp line against formal cooperation with the radical right, thus shaping how Portuguese democracy manages its new multi‑party era.
The European Central Bank (ECB) increased interest rates by 0.25 percentage points to 2.50% this Thursday, citing persistent inflation linked to energy costs and Middle East instability. ECB President Christine Lagarde declined to signal future moves, while opposition parties like the Left Bloc (BE) criticized the government's recent tax relief measures as insufficient to offset the impact of rising rates on household budgets.
The European Central Bank (ECB) is the central bank for the euro area responsible for setting interest rates, maintaining price stability and overseeing banking supervision across euro‑zone countries. The vice‑president is a senior policymaker at the ECB, so a nomination from Portugal would increase Portuguese influence on decisions that affect mortgages, savings and inflation across the euro area.
The Left Bloc (Bloco de Esquerda, BE) is a Portuguese left-wing party founded in 1999 as a coalition of far-left movements (UDP, PSR, and Política XXI). It positioned itself as a modern, progressive alternative to the traditional left, attracting younger urban voters with campaigns on social justice, LGBTQ+ rights, drug policy reform, housing, and labor protections.
The party's peak influence came during the 2015–2019 Geringonça ("contraption") government, when it supported António Costa's PS minority administration alongside the PCP. This arrangement reversed austerity measures and presided over economic recovery, giving BE significant policy leverage.
Since then, the party has suffered a sharp electoral decline — from 19 seats in 2015 to just 1 seat in the May 2025 election, its worst result in history. Leader Mariana Mortágua resigned in October 2025 after failing to reverse the slide. The party is currently undergoing a leadership contest and internal debate about its future direction, squeezed between the PS on one side and Livre on the other.
The government is increasing the tax discount on the Tax on Petroleum and Energy Products (Imposto sobre os Produtos Petrolíferos e Energéticos or ISP) to 7.4 cents per litre for diesel and 4.6 to 5.7 cents for petrol. Minister of the Presidency António Leitão Amaro announced the adjustment this Friday, citing expected market price increases. The government aims to prevent the state from profiting from inflation and rising fuel costs.
Update: Fuel prices set to rise despite tax discount adjustments
Despite the government's updated ISP discounts, fuel prices are expected to increase again next week. Diesel is projected to rise by approximately 6 to 7.5 cents per litre, while petrol prices will also see an upward adjustment.
The ISP (Imposto sobre Produtos Petrolíferos e Energéticos) is Portugal's excise tax on petroleum and energy products, charged as a fixed amount per liter on petrol, diesel, and other fuels. It is one of the main components of fuel prices at the pump, alongside VAT and the carbon tax (Taxa de Carbono).
The government can adjust ISP rates — temporarily or permanently — to influence fuel prices. Rate cuts are a common policy tool to ease cost-of-living pressures on drivers and transport businesses, though they also reduce government revenue.
For consumers, the ISP is significant because even small changes in the per-liter rate translate into noticeable differences at the pump, particularly for diesel users and commercial transport operators.
António Leitão Amaro is Portugal's Minister of the Presidency (Ministro da Presidência) in the government led by Luís Montenegro. He is a key figure in the Social Democratic Party (Partido Social Democrata or PSD) and often is the government's spokesperson. Those following housing and rental policy should note his role in announcing the June 2024 measures regarding evictions and inheritances.
The government has approved a temporary amendment to the Petroleum Products Tax (Imposto sobre Produtos Petrolíferos or ISP) regime. This measure aims to maintain fiscal relief on fuel prices, which have been rising due to the ongoing conflict in the Middle East.
The ISP (Imposto sobre Produtos Petrolíferos e Energéticos) is Portugal's excise tax on petroleum and energy products, charged as a fixed amount per liter on petrol, diesel, and other fuels. It is one of the main components of fuel prices at the pump, alongside VAT and the carbon tax (Taxa de Carbono).
The government can adjust ISP rates — temporarily or permanently — to influence fuel prices. Rate cuts are a common policy tool to ease cost-of-living pressures on drivers and transport businesses, though they also reduce government revenue.
For consumers, the ISP is significant because even small changes in the per-liter rate translate into noticeable differences at the pump, particularly for diesel users and commercial transport operators.
