Explainer of the week. How much will you save with the (new) reduction of the IRS

A iRS reduction provided for in the State Budget proposal for 2027 (OE2027) will allow an annual savings of 307 euros to those who earn 970 euros gross per month and 37 euros in a salary of 1,500, concludes consultant PwC.

The simulations performed for Lusa confirm that, in 2027, if the bill is approved as the government proposes, there will be “a general reduction of the IRS” in the various income levels, summarizes Joana Garrido, of the consultant’s tax team.

The savings calculated by the PwC are made between the IRS table entered in the OE2027 and the version of the IRS table that will be in force on December 31, 2026 if the additional relief proposal submitted by the Government of Louis Montenegro in September this year is approved in the meantime in parliament.

What's gonna change?

The impact results from update or review of three rules that influence the calculation of the tax.

According to the legislative initiative, the limits of the nine steps are updated by 3.88%, which benefits taxpayers of all steps of income.

At the same time, there will be an update of the minimum existence to EUR 13,580 (the IRS exemption rule for those receiving less), which will have an impact on the lowest income levels.

To this is added an update of the income threshold from which the additional solidarity rate applies, which, by increasing from EUR 80,000 to EUR 89,995, is aligned with the lower threshold of the last step of the IRS (9.o), which, highlights Joana Garrido, “affects the penultimate step” (8.o).

How much will you save? Here are some simulations

According to the simulations, a single and childless worker who receives 970 gross per month currently pays EUR 315 of annual IRS and will pay EUR 307 if the government initiative already approved for 2026. With the OE2027, this taxpayer will again benefit from a reduction in the IRS even though there is no change in fees. As the planned tax changes make it zero euro of IRS will have a savings of EUR 307 per year.

At a gross maturity of EUR 1,100, the annual savings in 2027 will be EUR 244 (it will be 273 compared to the first version of the IRS of 2026).

For a single and childless worker who earns 1,500 euros gross, the difference in 2027 will be smaller, with an annual tax reduction of 37 euros (it is 102 euros when compared to the initial IRS of 2026).

At a salary of EUR 2,000, the tax cut in 2027 is EUR 79 (up to EUR 180 when simulating the accumulated compared to the first version of the IRS of 2026).

At the salaries of EUR 2,250 or 3,250, the decrease between the final IRS of 2026 and the proposed IRS of 2027 will again exceed EUR 100 per year. According to the simulations, it will be EUR 119 in the first case and 165 in the second.

In a monthly income of EUR 5,000, the annual tax reduction will be EUR 334 (EUR 506 compared to the initial IRS of 2026).

The impacts are identical for a childless couple.

In a couple with two children, in which each worker receives EUR 970 per month, the changes to the IRS in 2027 will not be reflected in the pocket of this family, since currently the two taxpayers do not pay IRS and next year will continue to be exempt.

If the two members of the couple with two children receive EUR 1,100 each month, the annual savings will be EUR 488 (and EUR 546 when compared to the initial IRS of 2026).

If the salary is EUR 1,500, the reduction shall be EUR 73 (or EUR 204 in the accumulated).

At a salary of EUR 2,000, the cut will be EUR 159 (359 in the accumulated comparison).

If the members of the couple receive €3,750 each, the annual family gain will be €619 (or €963 in the accumulated).

In salaries of EUR 5,000, the couple will benefit from a reduction in the IRS of EUR 668 (or EUR 1,011 compared to the initial IRS of 2026).

If the salary of both is EUR 7,500, the annual reduction shall be EUR 1,397 (or EUR 1,740 in the accumulated).