Draft Budget cuts taxes on companies and workers

The document forecasts growth for the Portuguese economy above 2% next year, maintaining a budget surplus and continuing to reduce public debt, which, for the first time in 16 years will be below 90% of GDP.

The presentation of the Draft State Budget for 2026 (SB2026) followed on from its submission to Parliament.

In 2026, the Government intends to keep responding to households’ and companies’ problems; the State Budget is one of the instruments serving the Agenda to Transform Portugal.

The Government will continue its tax to offer tax relief on work, lowering the marginal rates from the 2nd to the 5th Income Tax bracket by a further 0.3 percentage points.

At the same time, rising wages will continue, following the path of increasing the minimum wage to €1,100 by the end of this term in office. This year, it will increase €50 per month to €920, as well as enhancing careers in Public Administration.

As for social action, the policy to protect and support families and the underprivileged will be strengthened – the Solidary Benefit for the elderly will increase by €40 in 2026 to €670, so that no pensioner will have to live with income lower than €870 in 2029; pensions will also be increased, as well as benefits and other social contributions.

As concerns companies, we note the cut in Corporate Income Tax to 19% in 2026, and the cut to 15% of the Corporate Income Tax applicable to the 1st 50 thousand euros of taxable income for SMEs and small and mid-caps.

The Government thereby continues its path to cut taxes on companies that began in 2025, reducing by 1 percentage point per year the Income Tax rate, which is expected to be 17% in 2028.

From taxation to human resources the Government acknowledges the importance of attracting foreign talent into the country to respond to the needs in the various sectors of the economy, through a regulated and humane immigration in collaboration with companies.

In 2026, the Government action will also be set by continuing to counter red tape in public services in order to improve their quality, access, and innovation.

oe.gov.pt

The Draft State Budget for is available on the website oe.gov.pt. This porta will share the documents on the State Budget as well as showing the measures envisaged for the next year in a systematised way. 

The website will also have news on the Ministry of Finance’s activities, especially fiscal execution, as well as a new financial literacy section called "Finanças à Lupa" (Finance in detail).