The Government approved this Thursday a Decree-Law reducing the IRS tax rates applicable to the first six income brackets, with retroactive effect from January 1, 2026. This measure, which benefits nearly three million families, will decrease the tax on income from work and pensions, allowing for an increase in the disposable income of Portuguese citizens.
“This means an additional 400 million euros in people's pockets,” stated the Minister of the Presidency, António Leitão Amaro, during the Council of Ministers' briefing. The Minister recalled that this is the sixth IRS reduction since April 2024, “continuing the strategy of valuing work and returning the results of economic growth and responsible public finance management to families”.
This measure, Leitão Amaro notes, is “a reinforcement of families' purchasing power, at a time when Portuguese citizens are feeling the increase in the cost of living, particularly through fuel prices.” According to the official, the benefit is primarily concentrated “on middle-income earnings, although higher-income taxpayers may also benefit,” as these include the previous brackets.
The Council of Ministers also approved the Decree-Law regulating the new Nationality Law, specifying the new requirements for the attribution and acquisition of Portuguese nationality. Changes have also been made to make processes faster and reduce delays.
The diploma now approved sets the residency periods for access to nationality, which will be seven years of legal residence for nationals of PALOP countries and European Union citizens, and ten years for nationals of other countries. For those born in Portugal to foreign parents, original nationality depends on one of the parents having at least five years of legal residence at the time of birth.
“"The main pillars of this reform were decided in the nationality law, and now it was time to approve the regulation for its full application, which is what we have done, while also seeking to simplify some procedural aspects to make it less bureaucratic," stated António Leitão Amaro."
“"We have made the granting of Portuguese citizenship more demanding in demonstrating an effective link," highlighted the minister."
This diploma also regulates the conditions under which tests of knowledge of the Portuguese language, culture, history, and institutions should be carried out, and defines the framework for the subsistence requirement, as well as the terms under which the declaration of adherence to the principles of the democratic rule of law should be made.
A Decree-Law was also approved to promote the reprogramming of financial charges associated with the expansion of the Lisbon Metro's Red Line to Alcântara, totaling 405.4 million euros, following the withdrawal of this investment from the PRR.
This expansion reinforces modal transfer to collective transport and contributes to national and European commitments to decarbonize mobility. Funding is secured through loans from the Lisbon Metro to the European Investment Bank and the Sustentable 2030 program – Thematic Program for Climate Action and Sustainability, ensuring the continuity of the work without impacting the State Budget.
The Council of Ministers also approved a resolution authorizing the Air Force to acquire a long-range mobile radar system, with a maximum investment of 22.2 million euros between 2026 and 2028. This equipment enhances the capacity for surveillance and threat identification in national airspace and strengthens Portugal's participation in NATO's integrated air and missile defense system.
