2026 State Budget approved with lower taxes and rising wages

The State Budget draft bill for 2026 was approved in the final voting with votes in favour from PSD and CDS-PP, abstention from PS and PAN and votes against from Chega, Iniciativa Liberal (IL), Livre, PCP and the single BE, PAN and JPP MPs.

Following the closing of the discussion in Parliament, Luís Montenegro stated that, "at the end of the day, the budget is unscathed" yet regretted that the two "major opposition parties did not resist the temptation of invading the Government’s sphere of decision".

Luís Montenegro also criticised what he classified as "arbitrary" and "à la carte" management of the process, stating that "auctioning off proposals on a yearly basis is not a mature way of viewing public policy". Among the examples noted, he indicated two matters:

• Higher Education school fees: the proposal to not update the fees to the inflation rate (around one euro per month) keeps these sums from being allocated to strengthening school social action and supporting students in financial difficulties. According to the Prime Minister, the sum would be for "funding expenses for those who have difficulties, ensuring equal opportunities for all"

• Tolls: the intention to eliminate tolls on specific motorways was also criticised, as it forces "all the Portugues people to pay the cost of decisions taken on a whim, without a coherent vision of the mobility system".

The Prime Minister underlined that Portugal "meets all the requirements to maintain growth, attract more investment and continue to increase income", stressing that the 2026 budget does not increase any taxes and includes measures for wage increases not just for lower wages but also average wages.

Luís Montenegro rated the document as "a trustworthy budget" yet reinforced that "executing the budget is much more important than approving it", assuring that the Government will focus on its execution "with the utmost energy from the first to the last day of the year".

According to the Minister of State and Finance Joaquim Miranda Sarmento, "this is a good budget that cuts the tax burden on households and enterprises, modernises public administration and is based on prudent, realistic, and transparent budgetary management". The document sets a growth in the Portuguese economy above 2% for next year, maintaining the budget surplus and continuing to reduce public debt which, for the first time in 16 years, will be below 90% of GDP.

This Budget has no "horsemen", that is, rules whose nature merits their discussion autonomously, which ensures greater transparency, thereby boosting the role of Parliament’s scrutiny.

Still on the matter of simplicity and transparency, this year, the Government’s draft budget launches a new way of looking at the State’s accounts document. For the first time, the entire Central Administration, as well as the Social Security Budget, use the programme budgeting method.

This means that for each area of Government, concrete goals and actions are defined, making it possible to check the amount allocated to each one. These targets will be measured using performance indicators, promoting greater transparency, efficiency, and accountability. 

The 2026 State Budget maintains the ambition of continuing to transform Portugal and solve the Portuguese people’s problems. In its opinion on the draft budget, the European Commission notes that Portugal, along with Greece and Bulgaria, "adopts an expansionist posture", which is due "in large part to the acceleration of the RRF’s execution", putting the country in the top 5 States with the most measures to stimulate the economy. 

The draft budget for 2026 was submitted on 9 October and the period for discussion and voting in each specific area ran until 27 November.