A new income tax reduction announced by the Government will have retroactive effects to January and will begin to be reflected in workers’ income in November, Executive Digest reports.

The measure, announced on 8 September by Prime Minister Luís Montenegro during the debate on the motion of censure presented by Chega, is expected to directly affect more than two million households and reach up to the sixth IRS bracket.

The specific reductions applicable to each income bracket are not yet known and are expected to be announced once the measure is approved. According to Executive Digest, the new tax relief is due to be approved at next week’s Council of Ministers meeting and will have an estimated budgetary cost of €400 million.

The reduction is part of the Government’s commitment to lower income tax by €2 billion by the end of the legislature.

Pensioners to receive December bonus

Montenegro also announced the continuation of the extraordinary supplement granted to pensioners over the last two years. The support will be paid in December and is intended for pensions up to €1,611.13, the equivalent of three Social Support Index (IAS) payments.

The measure will also have an estimated budgetary cost of €400 million.

Montenegro explained in Parliament that the bonus will continue to be extraordinary and will not be made permanent, citing the need to preserve the balance of public accounts.

The announcement comes after budget execution data showed a return to a surplus in public accounting in July, amounting to €287.1 million.

In the first seven months of the year, tax revenue exceeded that recorded during the same period of 2025 by €1.68 billion, a growth of 4.2 percent. At the end of July, the State had collected €561.3 million more in personal income tax than a year earlier, while corporate income tax revenue had fallen by €133.5 million.

Motion of no confidence rejected

The announcements were made during the debate on the motion of no confidence presented by Chega, which was ultimately rejected.

The initiative received 60 votes in favour, below the 116 required. PS, PCP, Bloco de Esquerda and JPP abstained, while PSD, CDS-PP, Livre, Iniciativa Liberal and PAN voted against.

The debate also addressed controversies surrounding the Minister of Internal Administration, Luís Neves, as well as health, education, housing, fuel and the cost of living.

Chega leader André Ventura reiterated his demand for Neves’ resignation, a position also supported by the Liberal Initiative, while PAN said the Minister no longer meets the conditions to remain in office. The Socialist Party directed its criticism at Montenegro, holding the Prime Minister responsible for the political instability associated with the controversies surrounding the Ministry of Internal Administration.

Montenegro reiterated his confidence in Neves, describing him as “an excellent Minister of Internal Administration” and stating that Portugal needs him.