The key facts

  • IRS brackets raised by 3.88%, the minimum wage will rise from 920 to 970 euros, pensions will be indexed by about 3%
  • Tuition fees at public universities will be unfrozen from the 2027/2028 academic year — currently capped at 697 euros
  • Spending on parental benefits will grow by 349.1 million euros (+31.7%), with discussion of extending 100% payment to 180 days

Taxes and income

Portugal's draft budget for 2027 (OE2027) affects households' disposable income — from taxes on wages to social benefits and spending on housing and education. Income tax (IRS) rates remain at the level presented by the government in September, but the bracket thresholds are raised by 3.88% — less than the wage growth benchmark under collective agreements (4.5% under the Tripartite Wage Agreement). The scale includes nine brackets with rates from 12.2% (income up to 8,666 euros per year) to 48% (over 89,995 euros). The additional 2.5% 'solidarity tax' rate will apply only to income above 89,995 euros per year, while the 5% rate remains for income above 250,000 euros. The IRS exemption for performance bonuses, profit-sharing payments and annual bonuses within 6% of the annual base salary is retained, provided the company meets wage-increase targets. The update of the special IRS deduction depends on the Social Support Index (IAS), the exact amount of which is not yet known.

Wages and pensions

The minimum wage will rise from 920 to 970 euros per month (gross), in line with the agreement under the social partnership; the net amount will depend on the worker's tax situation. In the public sector, the minimum salary will increase by 2.3% or 60.52 euros — to 995.51 euros (currently 934.99 euros). Pensions in 2027 face scheduled indexation based on inflation and GDP growth; according to available data, the increase will be about 3% for pensions of just over 1,000 euros per month and below, covering the majority of pensioners. Indexation will add about 824 million euros in state spending. The final figure will be confirmed after the publication of final inflation and growth data. In December, pensioners with pensions up to 1,611.39 euros will receive an automatic one-off payment: 200 euros for pensions up to 537.13 euros, 150 euros up to 1,074.26 euros, and 100 euros up to the set ceiling. The old-age solidarity supplement (CSI) will rise from 670 to 720 euros; the government maintains its goal of raising it to 870 euros by 2029. Spending on child benefits will increase by 59.5 million euros — due to a roughly 1.1% rise in the number of recipients and indexation of amounts by inflation.

Housing

Landlords under the taxation regime for 'moderate' rent rates will keep the reduced IRS rate of 10% instead of the previous 25% — on income until 31 December 2029 under new and existing contracts, but only for rents not exceeding 2,300 euros per month. For tenants, the maximum tax deduction for rent will rise from 900 to 1,000 euros, and for low-income taxpayers — to 1,100 euros. Young people under 35 will continue to be exempt from IMT tax and stamp duty when buying their first home; the maximum property value fully exempt from IMT will rise to 338,141 euros. The Porta 65 programme for young tenants is set to be strengthened, but without specific figures. The extension of the state guarantees programme for first-home purchases is described as likely, however Finance Minister Joaquim Miranda Sarmento clarified that a 'formal decision' has not yet been made.

Education and support for parents

From the 2027/2028 academic year, tuition fees at public universities are planned to be unfrozen: the current maximum for bachelor's degrees and professional technical courses (697 euros) will be indexed by inflation. The same applies to certain master's programmes required for a profession or demanded by professional orders; for other master's and doctoral programmes, the increase should reflect the actual cost of education. A similar proposal by Luís Montenegro's government in the previous budget (an increase to 710 euros) was rejected in a line-by-line vote. Spending on parental benefits will grow by 349.1 million euros (+31.7% compared to the 2026 forecast), with a total of 1,452 million euros allocated. Parliament is finishing consideration of a citizens' initiative to extend 100% payment of initial parental leave to 180 days. According to Labour Minister Maria do Rosário Palma Ramalho, about 230 million euros was allocated for a two-month extension, but the estimate was based on the government's version with the condition of fair sharing of leave between parents; the initiative's authors demand full payment for six months without this condition, which would cost the state more.

Fuel, cars and the Regressar programme

The draft does not provide for direct changes to fuel taxes, but the government expects revenue growth of 5.2% (plus 186 million euros) solely from increased consumption. Plans regarding the current 23-cent-per-litre discount are not disclosed in the budget; part of the discount is provided by a mechanism that returns additional VAT revenue from rising prices through the fuel tax. Sarmento said the government will maintain its policy of responding to price shocks — support for specific sectors and the return of 'tax windfall profits'. The additional levy on diesel cars under the IUC remains; rates are unchanged, but in 2027 the payment schedule changes: bills up to 500 euros in October, larger amounts in two instalments (the first in July); from 2028 the IUC will be payable from April. The government is considering 'new incentives for the purchase of zero-emission cars', but the timing, funding volume and conditions are not defined. The budget of the current electric car subsidy programme (10 million euros, opened in June) was exhausted within hours; Environment and Energy Minister Maria da Graça Carvalho said at the time that 'new funding rounds are unlikely to open this year'. The Regressar programme benefits for returning emigrants (in force until the end of 2026, created in 2019) are extended by another year: it exempts 50% of employment, business and professional income from tax for five years for former tax residents who spent at least five years abroad.

Next steps

The draft budget must pass parliamentary approval, after which it will be approved by the president of the republic. The publication also notes that rising prices for essential goods may 'eat into' part of the tax savings for families.