The regional income tax table, and the ones that are wrong

Madeira does not rebate the national tax. It replaces the table.

The mechanism is worth stating precisely, because the loose version leads people to look for a form to fill in. There is no form. The Região Autónoma da Madeira substitutes its own rate table for the general table in the income tax code, by regional decree. The bracket limits are identical to the national ones. Every rate in the regional table is exactly seven tenths of the national rate at the same bracket.

That seven-tenths figure is not a coincidence or a policy choice made afresh each year. It is the maximum 30%*, source: Diário da República, 2026, read August 26, 2026 differential the law on the finances of the autonomous regions permits, and Madeira now takes all of it.

Eligibility runs on tax residence in the region in the year concerned. It is a structural regional adjustment rather than a time-limited incentive with an application and an expiry date, which is what distinguishes it from the schemes that get written about far more often.

What changed on the first of January

Until 2025 the full differential applied only to the lower brackets and tapered as income rose, reaching as little as a single point at the top of the scale. From January 2026 the full differential applies to all nine brackets.

The effect at the bottom is modest: the first bracket rate is 8.75%*, source: Diário da República, 2026, read August 26, 2026 against 12.50%*, source: Diário da República, 2026, read August 26, 2026 nationally, on the same band of income. The effect at the top is the headline. The top marginal rate in Madeira is 33.60%*, source: Diário da República, 2026, read August 26, 2026, against 48%*, source: Diário da República, 2026, read August 26, 2026 on the mainland.

Anyone quoting Madeira's old tapered table understates the benefit substantially at higher incomes, and a great deal of the English-language material on the island is still describing the tapered version.

One figure this site will not repeat

The regional government published a range for the annual saving against mainland rates, and a national title carried it. The income assumptions behind that range were not stated anywhere that could be found, so the range appears nowhere on this site. A saving figure with no stated income behind it is a press line, not a number.

How the calculation actually splits

Portuguese income tax is not a simple marginal-rate stack, and this is where hand calculations go wrong. The published table has two rate columns for each bracket: a normal rate and an average rate.

Where taxable income passes the first bracket, it is split in two. The part equal to the upper limit of the highest bracket that fits is taxed at that bracket's average rate. The excess above it is taxed at the normal rate of the next bracket up. Using the normal rate on the whole amount overstates the bill, and using it on the excess alone without the average-rate portion understates it.

The regional table carries both columns too, each at seven tenths of its national counterpart, so the same procedure applies with the regional figures substituted throughout.

Withholding caught up in February

The regional withholding tables for 2026 were set by regional despatch and published in the Jornal Oficial da RAM in January. They were applied from February, with effect back to the first of January, which means the first month of the year was withheld on the previous tables and corrected afterwards.

The same despatch sets the threshold below which no tax is withheld at all, at €980/month*, source: Jornal Oficial da RAM, 2026, read August 26, 2026 a month. That figure is worth noticing for a second reason: it lands exactly on the regional minimum wage, which is a deliberate alignment rather than an accident, and it is a useful independent check that both figures were read correctly.

Withholding is not the tax. It is an instalment against the tax, settled at the annual return.

Two national tables are in circulation, and one of them is stale

The national brackets and rates changed for 2026: the limits rose and the rates in the second through fifth brackets were cut. That matters here because the regional table is derived from the national one, so a stale national table produces a stale regional table.

At the time these figures were checked, several widely-read Portuguese calculator sites were still serving a table from the 2023 era. The quickest test is the top of the first bracket. For 2026 it is €8,342*, source: Diário da República, 2026, read August 26, 2026. A table showing a first bracket several hundred euros lower, with a first rate two points higher, is three years out of date and everything computed from it is wrong.

The safe move is to check the first bracket limit against the budget law itself before trusting any calculator, regional or national.

What is regional, what is national, and what is not here

Regional: the general rate table, the withholding tables, and a reduction on the flat rates that apply to certain investment income, cut by 30%*, source: Autoridade Tributária e Assuntos Fiscais da RAM, 2026, read August 26, 2026. Company tax is regional too, at 13.3%*, source: Diário da República, 2026, read August 26, 2026, with a lower rate of 10.5% on the first €50,000*, source: Diário da República, 2026, read August 26, 2026 on the first slice of taxable profit for smaller companies.

National, with no regional variation at all: social security. Segurança Social’s public site no longer publishes a rate table — the host now serves only Segurança Social Direta. The rates are in the Código dos Regimes Contributivos, Lei n.º 110/2009, artigo 53.º, which sets the general global rate at 34.75%*, source: Diário da República, General contributory regime, employees and employers, read August 29, 2026, of which 23.75%*, source: Diário da República, General contributory regime, employees and employers, read August 29, 2026 falls on the employer and 11%*, source: Diário da República, General contributory regime, employees and employers, read August 29, 2026 on the worker. No figure is repeated elsewhere on this site because later amendments would have to be layered onto it first. That is a real gap and it is better stated than filled.

Not covered here: the incentive regime for inbound residents, which is a separate scheme with its own qualification tests and interacts with the regional table rather than replacing it. That has its own guide. The residence routes that determine whether any of this applies are in the visa guide, and the running costs the tax saving is set against are in what living here actually costs — where the electricity bill undoes a large part of the benefit for a taxpayer in that position.