Update of the specific deductions for Category A (employment) and Category H (pension) income under IRS
Specific deductions, unlike tax credits (deduções à coleta), which are general, exist for each category of income provided for in the IRS Code (Portuguese personal income tax) and correspond to a fixed or variable amount (depending on the type of income).
This amount is subtracted from gross income, i.e. the amount calculated without taking into account any expenses, costs or outgoings, thereby lowering the amount to which the IRS rate for the corresponding bracket will apply.
The idea behind specific deductions is that taxpayers had to incur costs to obtain a particular income and may therefore deduct/subtract part of those costs.
The specific deduction for both of these categories (A and H) corresponds to a fixed amount of €4,104.
The legal amendment in question provides that this amount will now increase in line with the update rate of the Social Support Index (IAS).
This year, the IAS rose by 6%, from €480.43 to €509.26.
Accordingly, the specific deduction for Categories A and H will increase by 6% to €4,350.24.
It should be noted that the amount of the specific deductions will be updated annually in line with changes in the IAS.
Contact us to find out more.
