The Government's proposal, approved by the Council of Ministers at the end of last week, includes a reduction in rates between 0.25 and 3 percentage points up to the 8th income bracket, with the largest reductions (3 and 1.25 points) falling, respectively, on the 6th and 8th income brackets.

The solution displeased the PS, which accused the Government of focusing the tax relief (accounted for at 348 million euros in 2024) on the highest incomes, leading the socialists to put forward a proposal for an amendment that focuses the most significant part of the relief on the lower brackets.

"What you will find in the bill is a greater redistribution, it is a greater relief for incomes between 1000 and 2500 euros", defended the parliamentary leader of the PS, Alexandra Leitão, indicating that the socialists' initiative was designed taking into account the budgetary margin included in the Government's proposal.

After the intense debate generated around the way the reduction in IRS rates was presented by the Government, today's debate and vote on the executive's proposal promises to test the balance of political forces that emerged from the elections of 10 March.

Without a majority in parliament, the Government's proposal will have to garner the support of other party forces to be viable, with the president of Chega having already admitted that his party could vote against the executive's proposal and make the PS's viable, arguing that it is closer to his own.

Also under debate in today's plenary session will be the project presented by the PS, as well as the initiatives of the other opposition parties, also within the scope of IRS.

In the case of Chega, the project also focuses on a change in tax rates, proposing a reduction of the same up to the 8th bracket -- leaving only the 9th bracket unchanged, which corresponds to the highest income bracket.

The Liberal Initiative is also bringing to debate a proposal that increases the specific deduction (the 'discount' that is automatically attributed to income from work and pensions), reduces tax rates and sets the minimum existence at a value equivalent to 14 national minimum wages at the current value (820 euros).

The Left Bloc, on the other hand, presented a bill that increases the value of specific deductions and the deduction of housing expenses to 360 euros, also eliminating the rule that prevents people with home loans taken out after 2011 from benefiting from this deduction.

The PCP's project, on the other hand, insists on the mandatory inclusion of income subject to special and withholding taxes, such as rents, capital gains or interest, for those at the top of the brackets, also proposing an increase in the specific deduction, a reduction in the rates that affect the first two brackets and an increase in those that affect the highest income brackets.

The Livre project focuses on IRS rates, proposing a reduction in those that affect the lower brackets, an increase (from 48% to 49%) in the rate that affects the 9th bracket, in addition to changing the income value limits of each income bracket.

Also under debate will be the PAN project, which advocates the approval of an emergency tax programme, "which guarantees an interim update of IRS brackets, the extension of the IRS Jovem regime and the reinstatement of the zero VAT regime on essential food products".

After the debate, the various initiatives will be voted on in general.

Read Also: IRS? Chega admits voting against the Government's proposal and making the PS's viable (Portuguese version)