Key Tax Measures
The State Budget for 2026 introduces a set of relevant tax changes with a direct impact on families, employees and businesses. The measures now approved follow a logic of value updates, selective tax relief and reinforced incentives in specific areas, while maintaining a prudent approach from a budgetary perspective.
Below is a summary of the key measures to highlight.
Personal Income Tax (IRS) and Social Security
In the area of Personal Income Tax, the general IRS tax tables will be updated by 3.51%, accompanied by a reduction of 0.3% in the tax rates applicable to the 2nd to 5th tax brackets, reflecting an adjustment for inflation and a modest easing of the tax burden on employment income.
The minimum subsistence threshold will also be increased to €12,880, strengthening the protection of lower-income taxpayers.
The deduction from IRS corresponding to 15% of VAT incurred on expenses related to books, music and dance activities, live performances, museums, historical sites and monuments will be extended, strengthening incentives for culture.
With regard to remuneration policy, the IRS and Social Security exemption regime applicable to productivity bonuses, performance-related bonuses, profit-sharing schemes and balance sheet bonuses paid on a voluntary and non-regular basis is extended. In 2026, these amounts will be exempt from IRS up to a limit of 6% of the employee’s annual base salary, provided that the employer has implemented an eligible salary increase under the terms of the Tax Benefits Statute.
Corporate Income Tax (IRC)
In the area of Corporate Income Tax, the standard IRC rate is now 19%, as the reduced rate of 15% is applicable to the first €50,000 of taxable profit for small and medium-sized enterprises.
Also noteworthy is the 10% uplift in deductible expenses related to compensation paid to employees under remote working arrangements, allowing such costs to be considered for tax purposes at 110% of the amount incurred, as an incentive for the adoption of remote work models.
Excise Duties
In the field of excise duties, the Budget provides for the gradual elimination of exemptions considered harmful in relation to petroleum and energy products, in line with environmental objectives and fiscal sustainability goals.
Municipal Property Transfer Tax (IMT) and Stamp Duty (IS)
The IMT brackets are updated by 2%, resulting, for example, in an increase in the threshold above which IMT becomes payable on the acquisition of a permanent primary residence, which rises to €106,346. In the case of a first acquisition by individuals up to the age of 35 who meet the conditions for exemption, the threshold increases to €330,539.
An incentive for the consolidation of rural properties is also introduced. In 2026, transfers of adjacent or contiguous rural properties intended for land consolidation operations will benefit from exemption from IMT and Stamp Duty, subject to prior recognition.
These operations will also benefit from exemption from notarial and registration fees, including the registration of the new rural properties resulting from the consolidation.
Final Remarks
The State Budget for 2026 reflects an approach of continuity and adjustment, combining inflation-related updates with targeted incentives in specific areas, such as culture and employment.
Although it does not introduce deep structural reforms, the practical impact of the newly approved measures will, in many cases, depend on the specific circumstances of each taxpayer, particularly in relation to remuneration policy and corporate taxation.
Almeida & Associados (ADA Legal) continuously monitors developments in the tax framework and supports its clients in interpreting and implementing the new rules, ensuring clear, compliant and tailored solutions aligned with each taxpayer’s needs.
