Minimum subsistence in Portugal: up to what income is no IRS due

What changed: from guaranteed floor to allowance

For many years Portugal's minimum subsistence rule was a simple promise: after IRS was paid, nobody would be left with less than a certain annual income. It was a floor.

Law 24-D/2022 changed the mechanism with effect from 1 January 2024. Today Article 70 of the IRS Code does not guarantee a net income: it subtracts an amount from taxable income, before the Article 68 brackets apply. It is a difference of form and of vocabulary, and it explains why the question people now type is "how much is the minimum subsistence allowance" rather than "what is the minimum subsistence".

The practical consequence is the same in spirit, a low income is not taxed, but the arithmetic is different, and most published material still describes the old regime.

The 2026 reference value is the annualised minimum wage

Article 70(1) sets the reference value as the greater of a fixed amount and 1.5 × 14 × IAS. For 2026 income:

• the fixed amount, set by the State Budget, is €12,880;
• the IAS side gives 1.5 × 14 × €537.13 = €11,279.73.

The greater wins, so €12,880 applies.

That number is not arbitrary. €12,880 is exactly 14 × €920, the 2026 national minimum wage paid fourteen times. And the identity repeats backwards: in 2025 the reference value was €12,180, which is 14 × €870, and in 2024 it was €11,480, which is 14 × €820. The minimum subsistence reference value is, in practice, the annualised minimum wage of the year in question.

Note the year: the reference value applies to the income year, not the filing year. The €12,880 figure is for 2026 income, declared in 2027. The return you file during 2026 covers 2025 and uses €12,180.

Why minimum-wage earners pay no IRS

This is the part that is rarely explained, and it is the most elegant piece of the mechanism.

On €12,880 of gross employment income:

• the specific deduction is €4,587.09 (8.54 × IAS, higher than the 11% social-security contributions on this income);
• the minimum subsistence allowance is €6,292.91;
• taxable income comes to 12,880 − 4,587.09 − 6,292.91 = €2,000.

The first-bracket rate of 12.5% applies to €2,000, producing tax of exactly €250.00.

And €250 is precisely the cap on the general family invoice deduction, the receipts you ask for with your tax number (Article 78-B). That tax credit cancels the tax and the IRS comes to zero.

This is not a coincidence. It is why the Article 70 formula subtracts the general-expenses cap divided by the first-bracket rate: €250 ÷ 12.5% = €2,000. That division converts a figure that lives on the tax side to the income side, so that the tax of someone earning the reference value is exactly equal to the credit they already have.

The formula, band by band

Article 70(2) has three paragraphs. Call RV the reference value (€12,880), SD the specific deduction, and €2,000 the converted general-expenses cap.

a) Gross income up to €12,880

allowance = RV − (SD + €2,000)

b) Between €12,880 and €14,641.67

allowance = [RV − 2.60 × (income − RV)] − (SD + €2,000)

For each euro of income above the reference value, the allowance falls by €2.60.

c) Above €14,641.67

allowance = [L − €8,342 − 1.35 × (income − L)] − SD

where L is the €14,641.67 threshold and €8,342 is the 2026 first-bracket limit of Article 68. Here the allowance falls by €1.35 per euro.

d) In every case the allowance is never negative and can never exceed gross income minus the specific deduction. It is that last rule that makes taxable income land at exactly zero at the lowest incomes.

The L threshold is not a loose number: it is the point where paragraphs b) and c) give the same result, and also the point where taxable income lands exactly at the top of the first bracket, €8,342.

The two numbers that matter

Summarising the formula in two boundaries, for a taxpayer with the standard specific deduction:

The household brake that catches everyone

Article 70(4) is the rule that surprises most, because it does not look at the taxpayer's own income but at the whole household's.

If the combined gross income of all taxpayers exceeds 2.2 × 14 × IAS multiplied by the number of taxpayers, €16,543.60 for one and €33,087.20 for a couple, in 2026, none of the taxpayers gets the allowance, however low each individual income is.

There is a second brake in paragraph b) of the same provision: if income that is not aggregated and is taxed at flat withholding rates exceeds 14 × IAS per taxpayer, the allowance also falls away.

Who qualifies

Article 70(2) requires gross income to come predominantly from:

• employment (category A);
• pensions (category H);
• the professions in annex i to Portaria 1011/2001, except code 15, "other service providers".

It is that exception that leaves out much generic self-employed work. Someone carrying on an activity named in the table, the list of specific professions, can benefit; someone classified under the generic code cannot.

The word "predominantly" has no numeric threshold in the article, which is why our calculator flags the condition rather than enforcing it.

What Article 70 is not

Three things are frequently confused and worth separating.

The specific deduction (Article 25) is the automatic €4,587.09, or the value of compulsory contributions, if higher, that any holder of employment income gets. It applies always, whatever the income.

The minimum subsistence allowance is added to it, but only exists at low incomes and disappears as income rises.

Tax credits (invoices, health, education) do not touch income at all: they reduce the tax already computed. A euro of tax credit saves a euro of tax; a euro of allowance only saves the rate that would have applied to it.

Where to run the numbers

The minimum subsistence calculator applies the three paragraphs, the floor and cap of paragraph d) and the household brake, and shows the tax with and without the allowance so you can see what it saves. For the next step, the IRS calculator applies the brackets to the taxable income that is left, and the IRS deductions calculator handles the credits that reduce the tax already computed.