Personal Income Tax (IRS) was instituted via Decree-Law 442-A /88 of 30 November.
Personal Income Tax (IRS) is applied to the annual amount of income earned by individual persons, within six categories.
Residents are taxed on their total earned income (in Portugal and abroad) and non-residents are taxed on income they earn in Portugal (according to IRS categories). In 2009, a special, more attractive regime was created for non-habitual residents.
The characteristics, degree of application and categories of IRS in Madeira are the same as those that apply to Mainland Portugal and the only difference is in the rates that are applied to the income obtained in Madeira.
| Bracket | Taxable income (€) | Normal Rate (%) | Average Rate (%) |
| 1º | from 8 059 | 9,1 | 9,1 |
| 2º | over 8 059 to 12 160 | 11,55 | 9,926 |
| 3º | over 12 160 to 17 233 | 15,4 | 11,538 |
| 4º | over 17 233 to 22 306 | 17,5 | 12,894 |
| 5º | over 22 306 to 28 400 | 22,4 | 14,894 |
| 6º | over 28 400 to 41 629 | 24,85 | 18,085 |
| 7º | over 41 629 to 44 987 | 36,98 | 19,495 |
| 8º | over 44 987 to 83 696 | 40,95 | 29,418 |
| 9º | over 83 696 | 46,56 | - |
The amount of taxable income, when greater than €8 059, is divided into two parts: one of them being equal to the limit of he higher of the brackets it falls under, subject to the average rate of this bracket; and the other part equal to the remainder, which shall be subject to the normal rate of the bracket that is immediately higher.
For more information about the characteristics, degree of application and categories of IRS in Portugal click here.
