State State Budget 2026: Measures for Businesses, Investment and Families

Measures for Businesses and Investment

• Corporate Income Tax (IRC) Reduction

The Government proposes to reduce the general corporate income tax rate from 20% to 19%, and for SMEs with income up to €50,000, the rate will decrease to 15%.
The stated goal is to reach 17% by 2028, bringing Portugal closer to the European average and strengthening tax competitiveness.

• SIFIDE: End of the Indirect Regime

The Tax Incentive System for Business Research and Development (SIFIDE) undergoes a structural change: the indirect investment mechanism is terminated.
The decision is justified by the €2 billion immobilised in investment funds but raises concerns about a possible slowdown in private R&D investment.

• Banking Sector

Following a Constitutional Court decision, the solidarity surcharge applied to the banking sector is revoked.
Between 2020 and 2024, the sector contributed approximately €50 million. The Government now commits to reimburse €200 million, a measure that will impact the 2026 budget execution.

• Pharmaceutical and Medical Device Sector

The extraordinary contribution created in 2011 remains in force, with the total accumulated amount exceeding €2.5 billion.
This reflects the Government’s preference for maintaining stable revenue streams, even in a sector subject to strict European regulation.

• Investment in Artificial Intelligence

The 2026 State Budget allocates €20 million for the development of artificial intelligence solutions in public administration, including the launch of the Portuguese multimodal LLM “Amália”, a virtual assistant for the gov.pt portal, and new AI applications aimed at administrative modernisation.
Although modest in scale, the measure marks a digital shift within the public sector.

• Media and Tourism

The budget proposal allocates €314 million to the Media Sector Support Programme (PACS) to promote sustainable solutions that respect editorial autonomy.
In parallel, the tourism sector will receive €532 million for international promotion and the consolidation of the sector as a key driver of the economy.

In summary, the 2026 State Budget focuses on selective corporate tax reductions, digital investment, and targeted support for strategic sectors, while maintaining a relevant level of sector-specific contributions.

Measures for Families and Workers

• Personal Income Tax (IRS) and Disposable Income

The IRS brackets will be updated by 3.51%, with a 0.3 percentage point reduction in rates for the 2nd to 5th brackets, benefiting mainly middle-income earners.

The Youth IRS scheme maintains a phased exemption for up to 10 years, capped at €28,000 per year, aimed at retaining young talent, though limited to formal employment.

• Minimum Wage and Minimum Living Threshold

The national minimum wage increases by €50, reaching €920 per month, with a target of €1,100 by 2029.
The minimum living threshold rises to €12,880 per year, ensuring IRS exemption up to the minimum wage level.

• Productivity Bonuses

Productivity bonuses paid by companies to employees remain exempt from taxation up to 6% of base pay, provided the company records an average salary increase of 4.6%.

• Pensions and Solidarity Supplement for the Elderly (CSI)

Pensions will be adjusted in line with inflation and economic growth and may include an extraordinary supplement depending on budget performance.
The CSI increases by €40, reaching €670.67 per month, with a target of €870 by 2029.

• Family Allowance and Public Administration

The family allowance will be updated in line with inflation, uniformly across all income brackets and ages.
In the public sector, salaries will rise by €56.58 or 2.15%, whichever is more favourable.

• Property Transfer Tax (IMT)

The Municipal Tax on Onerous Property Transfers (IMT) brackets will be updated by 2%, raising the exemption threshold to €106,346.