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What criteria define what you pay into the IRS?

28 de September, 2022

IRS is a reality for taxpayers in Portugal. But for many people, it is still shrouded in doubts and questions.

How much do you pay into the IRS and why do you pay that amount? These questions may arise when you look at your pay slip or when you are analyzing a job offer, for example.

That’s why we’re going to try to make it simple and help you understand the criteria that define the amount you pay into the IRS. Before that, let’s look at what the IRS actually is.

What is IRS?

IRS refers to Personal Income Tax. It is a tax levied on taxpayers’ income, with a few exceptions for income that is exempt from taxation.

IRS is a direct tax, in that it is levied directly on taxpayers’ income. And it is progressive, because the higher the income subject to tax, the higher the rate applied.

IRS deductions made each month are calculated on the basis of the IRS tables in force. These withholding tax tables – the tax is automatically withheld by the paying entity when the salary is processed or the amount owed to the taxpayer – indicate the rate that will be applied to your gross income.

But what determines this rate in practice?

Criteria that define the IRS rate

There are a number of variables that will influence the rate levied on your income:

  • Gross monthly income: as your gross income gets higher, you move up a bracket and therefore deduct a higher percentage.
  • Source of income: the rate varies depending on whether the taxpayer is an employee, self-employed or pensioner.
  • Marital status: whether you are married or not also changes the rate. If you’re married, there are also differences depending on the number of people in the household (you’re the only one if your spouse isn’t a dependent worker; if you’re both dependent workers, then you’re the only two).
  • Number of dependents: the rate is higher for those with no dependents and decreases as the number of dependents increases (up to 5 or more dependents).
  • Disability: different rules and taxes apply to people with disabilities. For tax purposes, a disabled person is someone with a degree of permanent incapacity equal to or greater than 60% (proven by a medical certificate of multipurpose incapacity).
  • Place of residence: the IRS tables to be consulted are different for taxpayers with tax addresses on the mainland, in the Azores and in Madeira.

Is the meal allowance subject to IRS?

The meal allowance granted by your company is exempt from IRS up to the amount of:

  • 6.00€/day if paid in cash;
  • 10.20€/day if paid in cash.

If you receive more than €6.00/day in cash or more than €10.20/day in social vouchers (card, for example), the remaining amount is included in the IRS deduction calculations.

Did you know all the criteria that define the amount you pay into the IRS? We hope we’ve helped simplify the subject!


Article updated in January 2025 to include the new meal voucher values ​​in effect.

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