Pensioners receive their pension with the new IRS tables

Social Security will pay August pensions this Friday by bank transfer or postal order, in accordance with the new IRS withholding tax rates.

With the tax relief, the net amount of the pension will be higher than in the first seven months of the year.

There is relief not because there is an increase in the gross pension, but because the percentage of IRS to be discounted monthly directly from the gross pension will be lower.

To reflect the reduction in IRS rates from the 1st to the 8th bracket approved in July by parliament, the Government adapted the withholding tax tables, reducing the rates that apply monthly to income paid by Social Security and the General Pensions Fund (CGA), which only delivers pensions on August 19th.

Throughout this year, there are three distinct monthly tables: some for the period from January to July, others for the months of August and September, and others for the months of October, November and December.

In August and September, the rates are especially lower, to compensate for the fact that IRS collection in the first seven months of the year was carried out based on the version of the IRS tax brackets prior to the reduction approved in July by the Assembly of the Republic.

During these two months, some pensioners will have a 0% withholding tax. Those who receive a gross pension of up to €1,116—a single pensioner or a pensioner married to someone who also earns income—will not pay any IRS tax, as the table provides for an exemption (a 0% rate). Therefore, the pension received in the bank account will be equal to the gross amount.

IRS will only be payable by pensioners who earn more than 1,116 euros gross, and for amounts immediately above this income band, the rate continues to be close to 0% or less than 1%, as shown in simulations carried out by the consultancy firm PwC for Lusa.

Pensions between €1,117 and €1,581 will have less than €10 of IRS withheld in each of these two months.

In September, in addition to their monthly pension amount, pensioners earning up to €1,567.50 gross will receive an extraordinary supplement ranging from €100 to €200. Although it counts toward the annual IRS calculation, as it is considered category H income, the supplement will be exempt from withholding tax, as the Government expressly established an exemption in the decree-law that created this extraordinary payment.

In the months of October, November and December, monthly retention rates will be higher than those in August and September, but lower than those that applied from January to July.

As is happening this Friday with Social Security retirees, CGA pensioners will also receive their August pensions according to the new tables, as confirmed to Lusa by an official from the Ministry of Labor, Solidarity and Social Security (MTSS).

Last year, when the IRS was also lowered mid-year, both Social Security and the CGA were unable to immediately process pensions under the new withholding tables and had to make the adjustments later. This time, the government has announced that processing will now follow the new rules.

On the Social Security website, the institute published a note explaining this, stating that "from August onwards, pensions will be paid at the new rates."

"In August and September, withholding taxes will be lower to correct for the amounts overwithheld in the first seven months of the year. Starting in October, the normal tables will come into effect and remain in effect until the end of the year," explains Social Security.

The institute notes that, starting in September, pensioners can request that Social Security apply a “withholding tax rate higher than that corresponding to their tax bracket.”

PwC simulations show that the new tables will, as a rule, reduce refunds or increase the amount taxpayers must pay when paying their taxes in 2026, considering the three withholding versions.