Effective IRS rate drops to 11.65% and nearly half of families pay no tax
The effective tax burden on Portuguese household income fell again in 2024, according to statistics published this Monday by the Tax Authority (AT). The effective IRS tax rate dropped to 11.65%, down from 12.85% in 2023 and 13.05% in 2022, a relief of 1.20 percentage points in a single fiscal year.
The drop occurs in a seemingly paradoxical scenario: declared aggregate income grew 9.64% year-on-year, while liquidated IRS fell slightly (-0.14%). In short, more is declared and proportionally less is paid.
Nearly half of households pay no IRS
The number of households filing IRS returns grew 3.31% in 2024, but only 55.30% ended up with tax due. This means 44.70% of families paid no IRS at all, the highest exemption level recorded in the three-year period.
Labour and pensions still dominate
- Dependent labour: 64.68% of aggregate income
- Pensions: 25.23%
- Business and professional income: 5.03%
Special-rate income jumps nearly 20%
One of the most striking signs of 2024 is the income subject to special rates, which grew 19.23%. Property income (rents) accounts for 44.14%, followed by labour income (19.94%) and capital gains (18.22%). 86.90% of this income is above 40,000 euros annually.
System keeps strong progressivity
Households earning between 40,000 and 100,000 euros (22.35% of taxpayers) account for 41.67% of total revenue. Those above 100,000 euros (only 3.69%) bear 35.10% of IRS collected.
Lisbon and Porto concentrate two-thirds of the tax
Lisbon, Porto, Setúbal, Braga and Aveiro together account for 63.60% of households, 66.47% of aggregate income and 72.86% of liquidated IRS.
Deductions and benefits weigh nearly half
In 2024, deductions reached 4,719 million euros (27.27% of liquidated IRS) and tax benefits totalled 3,379 million euros (19.53%). The non-habitual residents regime alone represents 57.57% of total benefits.
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