Next year will see the arrival of new brackets in the IRS income tax schedule. The new tax schedule will now have seven taxable brackets, two more than before, check them out.
Changes in the IRS scale, step-by-step
The number of taxable installments rose from five to seven from January 2018. This measure appears in the Portuguese State Budget for the New Year. According to the Minister of Finance Mário Centeno this new structure of the IRS scale will benefit 1.6 million households.
To better understand how it works and how these changes can affect you we explain what will change for each level.
First bracket :
Nothing changes for the 1st tier which includes taxable income up to 7,091 euros with a rate of 14.5%.
So far the second tier covered revenues between 7,091 euros to 20,261 euros with a rate of 28.5%. Now this tranche is divided into two news: a rate of 23% for income between 7,091 euros and 10,700 euros and another 28.5% for those between 10,700 euros and 20,261 euros.
The third tier currently includes a rate of 37% for income between 20.261 euros and 40.552 euros. In 2018 this tranche will also be divided into two: from 20,261 euros to 25,000 euros the rate will be 35% and incomes between 25,000 euros and 36,856 euros remain taxed at 37%.
The fourth tranche currently concerns revenues between 40,522 euros and 80,640 euros with a rate of 45%. From now on this slice will concern the taxable incomes from 36,856 euros up to 80,640 euros for a rate of 45%.
The fifth installment will become the seventh. This last installment of the IRS 2018 scale will cover taxable income above € 80,640 with a rate of 48%, as has been the case so far.