Timeline

What happened: The government approved the OE2026 proposal, focusing on fiscal relief and minimum wage increases. Previous budgets under PM Montenegro also emphasized tax reduction.
What's happening now: The OE2026 proposal is being prepared for submission to Parliament by October 10, 2025. Public debate and scrutiny from institutions like the Public Finance Council and the Bank of Portugal are ongoing.
What's next: The general debate is scheduled for October 27-28, 2025, with the final global vote set for November 27, 2025. The government aims to secure parliamentary approval amidst ongoing economic and fiscal considerations.

Different Perspectives

Government: Views the budget as crucial for economic growth, investment, and social stability, emphasizing fiscal responsibility and competitiveness.
Businesses/SMEs: Likely to welcome the tax reductions as a stimulus for investment and expansion, though concerns about overall economic stability may persist.
Workers/Unions: The minimum wage increase is a positive step, but focus may remain on the pace of wage growth and its adequacy relative to the cost of living.
Opposition Parties/Watchdogs: Institutions like the Public Finance Council and the Bank of Portugal may express concerns about the budget deficit projections and the sustainability of fiscal policies.

What You Need to Know

The 2026 State Budget prioritizes tax cuts for individuals and corporations.
Personal Income Tax (IRS) rates will see a further reduction, and Corporate Income Tax (IRC) will drop to 19% (15% for SMEs on initial profits).
The national minimum wage is projected to reach €920 in 2026.
The budget faces a significant starting fiscal pressure of €4.449 billion.
The government forecasts a small surplus of 0.1% for 2026.

Regional Perspective

For Portugal, the OE2026 represents a bold economic strategy aimed at revitalizing growth through fiscal incentives. The focus on reducing both personal and corporate income taxes, alongside a commitment to increasing the minimum wage, reflects a national effort to improve competitiveness, attract investment, and enhance the living standards of its citizens. This budget is particularly significant as it attempts to balance the immediate benefits of tax relief with the long-term fiscal health of the nation, a delicate act for a country historically sensitive to its public finances.

Why This Matters

This budget signals Portugal's economic direction for 2026, impacting investment, employment, and household finances.
The emphasis on tax reduction is a key policy differentiator for the current government, reflecting its core economic philosophy.
The planned increases in the minimum wage are a significant social policy measure, directly affecting a substantial portion of the workforce.
The fiscal implications, including the projected deficit and surplus, will be closely monitored by international financial markets and rating agencies.