One of the standout tax changes for the 2026 Portuguese IRS is the expansion of deductible expenses. From this year onwards, taxpayers can deduct a portion of the VAT paid on books and cultural activities — including theatre, concerts, dance shows, museums, and historical monuments — provided they retain invoices with their tax identification number (NIF). This deduction aligns with similar ones already available for expenses like restaurant bills, hairdressing, and auto repairs.
This measure is designed to encourage cultural participation and reading, helping households to offset some of the costs associated with these activities.
In addition, the 2026 State Budget updated the IRS withholding tax tables, lowering rates for several income brackets and adjusting limits upwards. These changes mean many employees and pensioners will see lower tax withholdings on monthly pay, and those on lower incomes may benefit from full tax exemption up to certain thresholds.
Other tweaks include increases to minimum subsistence limits and general deduction thresholds, all contributing to a more favourable tax outcome for many taxpayers.
Conclusion
The IRS changes for 2026 in Portugal bring a mix of broader deductible categories and refined tax table adjustments that together reduce the tax burden for many families and individuals. Knowing how to take advantage of these updates is essential for effective tax planning and compliance.
How Nominaurea can help
At Nominaurea, we provide:
- Expert tax planning and deduction optimisation.
- IRS return preparation and verification services.
- Tailored advice to maximise your tax benefits.
- Support in applying the latest tax changes to your financial situation.
Get in touch to make your tax compliance easier and more efficient.
