IRS Madeira 2026 - the 30% regional differential, explained

Until 2025, Madeira's IRS differential did not reach every bracket: the top brackets had a smaller reduction. Regional Decree 8/2025/M, published on 30 December 2025, changed that. Since 1 January 2026, all 9 IRS brackets carry the maximum 30% reduction against the mainland.

For a Madeira resident, that means paying up to 30% less IRS on the same income than a resident of Lisbon or Porto. In the 9th bracket (taxable income above 86 634 €), the marginal rate is 33.6% in Madeira and 48% on the mainland.

What changed in 2026

1. All 9 brackets carry the maximum 30% differential. Before 2026, the top brackets had a smaller reduction.
2. The monthly withholding exemption threshold in Madeira is €980/month.
3. Madeira has its own withholding tables. The 2026 tables were approved by Despacho 19/2026 (Jornal Oficial da RAM, 20 January) and are on at.madeira.gov.pt.

Bracket table 2026 - Madeira and mainland

Marginal rates, applied to the part of income that falls within each bracket:

Mainland rates: article 68 of the IRS Code, in force for 2026 income. Madeira rates: the table in article 18 of DLR 8/2025/M, which replaces the national table for residents of the Region.

The cut announced in September 2026

On 17 September 2026 the Council of Ministers approved a new IRS cut for all 2026 income: 0.3 percentage points off the 1st and 6th brackets and 0.5 points off the 2nd to 5th. Bracket limits and the rates of the 7th to 9th brackets stay the same. The Government expects the effect in November salaries and pensions.

It is not law yet. Bill 108/XVII/2 reached Parliament on 21 September and still has to pass.

Madeira needs one more step. The Region has its own IRS table, set by regional decree in place of the national one. The national cut only reaches Madeira residents once the Region approves a new table and publishes its withholding tables. On 9 September the President of the Regional Government said Madeira will follow the cut and keep the 30% differential.

If the 30% differential is kept, the rates become:

The last column is our projection (proposed rate × 0.70) and only applies once the Region approves a new table. In percentage points the cut in Madeira is 0.21 to 0.35; in proportion, each bracket falls by the same share as on the mainland.

What has happened and what is still missing

How much Madeira residents save: tables and charts

The tables below use the same assumptions as the simulations the Government published for the mainland on 17 September and apply them to the Madeira table. The calculation reproduces the Government's mainland figures to the cent, which is what makes the Madeira figures reliable.

At €2,000 gross a month, for example, a single employee pays €1,256.47 less IRS a year in Madeira than on the mainland in 2026. With the cut, the annual saving is €100.44 on the mainland and €70.40 in Madeira, if the Region keeps the 30% differential. The saving from the cut is smaller in euros in Madeira because the tax starts lower.

Single, no dependents, employee

Couple with two dependents, taxed jointly

Pensioners with the same gross amount get the same saving from the cut: the Government's figures are identical for employees and pensioners, and the same holds with the Madeira table.

Worked example - 30 000 € taxable income

For a single taxpayer, no dependents, with 30 000 € taxable income (after deductions), at the 2026 rates in force. You can change the example right here: another income, the monthly gross salary instead of taxable income, or a couple.

To include dependents and see the net salary, use the IRS 2026 Madeira simulator.

Withholding and monthly salary

Employees have tax withheld every month under the Region's tables. In 2026, anyone earning up to €980 gross a month has no monthly withholding, but still files the annual return (Modelo 3).

Who qualifies

The differential applies to Madeira tax residents, a technical definition rather than holiday status:

• 183 or more days in the Region during the tax year, or
• a home in the Region on 31 December that you intend to keep as your habitual residence, or
• your centre of vital interests (family, main economic activity) in Madeira.

Madeira residents file IRS on Portal das Finanças with a Region address as their tax domicile. If you move from the mainland mid-year, check with an accountant how the differential applies that year.

How it applies

The differential is automatic:

1. Employee: your employer applies the Madeira withholding tables if your tax domicile is in the Region. Check with HR.
2. Freelancer (recibos verdes): the differential applies at the annual assessment (Modelo 3).
3. Pensions and other income: Portal das Finanças applies the Region's table at the annual assessment if your domicile is up to date.

Critical: if you recently moved from the mainland to Madeira, update your tax domicile on Portal das Finanças as soon as you can. Withholding follows the registered domicile.

FAQ

Is the September cut in force?

No. It is a bill Parliament still has to pass, and Madeira has to approve its own table. This guide is updated as each step is published.

Does this apply alongside IFICI (the NHR successor)?

IFICI has a special 20% rate on qualifying income for 10 years. For qualifying high earners IFICI tends to win; for everyone else the regional table applies. Compare case by case with an accountant.

Does the differential end in 2027?

There is no end date. The reduction of up to 30% comes from the Autonomous Regions Finance Law; DLR 8/2025/M took it to the maximum across all 9 brackets from 2026. Each Regional Budget can keep or change it.

Can I move to Madeira just for the tax?

Only if you are a real tax resident: centre of life, 183 or more days, a home here. The tax authority checks doubtful domiciles. If you are relocating, talk to a certified accountant before deciding on the tax benefit alone.

What about the Azores?

The Azores set their own differential in their regional budget. This guide covers Madeira only.

Does the differential apply to corporate tax?

Madeira has its own IRC rates (13.3% general and 10.5% on the first €50,000 of taxable profit for SMEs, per DLR 8/2025/M). The IBC / Free Trade Zone regime is separate and has its own rules.

This site is editorial. We are not OCC-certified. Calculations are estimates based on the 2026 rules in force. Verify with an OCC-certified accountant before acting.