Portugal's 2027 Budget Exempts Earnings Up to 970 Euros a Month From IRS and Unfreezes University Fees: What the Bill Changes for Households

The government's 2027 State Budget proposal, the Proposta de Lei n.º 110/XVII/2.ª, reached the Assembleia da República (parliament) on Thursday 8 October. Most of the headline numbers were trailed weeks ago, including the lower IRS rates announced in September and the 50 euro rise in the pensioners' income floor to 720 euros. The bill itself adds the detail that decides what households actually pay. Everything below is a proposal: parliament votes on the general principles on 28 October, amends the text in committee, and holds the final vote on 24 November, according to ECO.

Income tax: brackets, the tax-free floor and the top surcharge

Article 60 of the bill rewrites the income tax (IRS) table. Every bracket limit moves up by 3.88 percent: the first bracket now ends at 8,666 euros of taxable income instead of 8,342, and the top rate of 48 percent starts above 89,995 euros instead of 86,634. Observador notes that this is below the 4.5 percent average pay rise that the government, employers and the UGT union confederation set as the benchmark for 2027, so a worker whose pay rises faster than that can find a slightly larger share of it taxed at a higher rate.

The same article raises the mínimo de existência (the tax-free income floor) from 12,880 to 13,580 euros a year. That is 970 euros times 14 monthly payments, the minimum wage the government says it will set for 2027, so a full-time worker on the minimum wage pays no IRS. The floor applies to people whose income comes mainly from employment, pensions or certain listed self-employed activities.

It also changes the taxa adicional de solidariedade (solidarity surcharge), whose thresholds ECO says have not moved since 2013. The 2.5 percent surcharge will start at 89,995 euros of taxable income rather than 80,000, in line with the new top bracket; the 5 percent rate above 250,000 euros stays. That is a 12.5 percent rise in the threshold, worth up to about 250 euros a year to a single filer.

Buying a home

Article 65 updates the property transfer tax (IMT) bands by 2.3 percent. A main home bought for up to 108,792 euros pays no IMT, up from 106,346, and the 7.5 percent flat rate starts above 1,177,323 euros. For buyers aged 35 or under purchasing their first permanent home, the full exemption ceiling rises from 330,539 to 338,141 euros. ECO reports that the stamp duty and fee exemptions for young buyers follow the same limit. The budget report says the public guarantee that lets young buyers borrow up to the full price stays, although Finance Minister Joaquim Miranda Sarmento told reporters, according to ECO, that the formal decision had not yet been taken. The report also promises more money for the Porta 65 rent support scheme, without giving a figure.

Tuition, bonuses and the TV licence fee

• University fees: Article 116 ends the freeze on undergraduate tuition, capped at 697 euros since 2020. From 2027/2028 the cap rises by 2026's average inflation, excluding housing. Lusa recalls that parliament blocked the same move in last year's budget.
• Tax-free bonuses: Article 78 renews the "15th month": productivity bonuses of up to 6 percent of annual base pay are free of IRS and social security contributions, but only at employers that raise pay by at least 4.5 percent.
• Audiovisual contribution: Article 71 freezes the RTP fee charged on electricity bills, which Notícias ao Minuto puts at 2.85 euros a month plus VAT.

These rules apply to anyone who is tax resident in Portugal, whatever their nationality. The tuition cap does not cover students enrolled under the separate international student statute, whose fees follow separate rules.