Salaries of up to €1,000 will receive a monthly relief of around €24 and pensions of up to €992 will have an additional gain of €30, according to ECO's accounts based on the new withholding tax tables published in the Diário da República.

The levels of the withholding tax tables and the instalments to be deducted have risen to reflect the new reduction in the IRS approved in the State Budget for 2025, which updates the income ranges by 4.6%, increases the minimum existence (the amount up to which remuneration does not pay tax) to 870 euros and increases specific deduction (the amount deducted from earnings to determine the taxable amount) up to 4,462.15 euros.

Thus, from this month onwards, dependent workers and pensioners who earn 870 euros, the reference for the new national minimum wage which increased by 50 euros, will continue to be exempt. Until December last year, only earnings of up to €820 did not require tax deductions.

For example, a single worker without children with a gross monthly salary of €875 will only deduct €1.09, which means €25.74 less in relation to the €25.74 they retained at the end of last year.

In the case of a gross salary of €900, the monthly relief will be 24.75 euros: the withholding tax of 37.44 euros will fall to 12.69 euros. The ECO accounts also show that a salary of 992 euros will be deducted by 55.84 euros when, in December, it had to be paid to the State by 75.89 euros, which represents a difference of 20.05 euros.

Pensions up to €900 will be exempt

In relation to retirement benefits, ECO also carried out simulations for the case of an unmarried retiree or two married pensioners without dependents. Anyone earning up to €900 gross per month will continue to be exempt. A reform of this value had to pay 17.79 euros per month to the Tax Authority (AT).

Pensions worth 992 euros will now be deducted at 30.84 euros, which means 30.22 euros less compared to the 61.06 euros that had to be advanced to the State until the end of last year. And a retiree with a pension of €1,000 will feel a relief in his pocket of €23.45 per month.

It should be noted, however, that withholding tax is a type of payment on account, that is, an advance to the State. In the 2026 settlement, the accounts will be settled. Those who deducted more may have a larger refund and those who withheld less may receive less or be asked to pay tax.

“Less withholding tax is a reflection of the update of the IR bands by 4.6% approved in the State Budget for 2025. The withholding rates are the same, what changes are the income ranges, subject to a certain tax, which increase, and the instalments to be deducted to calculate the tax rate”, explains tax specialist Luís Nascimento from Ilya consultancy to ECO.

The Tax Law specialist also highlights that, with the State Budget for 2025, “withholding tax for self-employed workers, the so-called green receipts, drops from 25% to 23%”.