This article presents Portugal’s Tax Cuts in 2025, which are happening in the Autonomous Region of Madeira through changes in the areas of Personal Income Tax (IRS) and Corporate Income Tax (IRC), with a special focus on the measures recently implemented in the Autonomous Region’s Mid-Year Budget.
Main Changes in the IRS
1. Extension of the Maximum Differential of 30% to the 6th Tax Bracket, in comparison to the Portuguese mainland
The Regional Government of Madeira has decided to apply the maximum differential of 30% provided for in the Finance Law of the Autonomous Regions to the 6th tax bracket of the IRS. This measure significantly reduces the tax burden for a greater number of taxpayers, promoting greater progressiveness and tax justice.
2. Reduction of Rates in Higher Tax Brackets
New reductions were introduced for the higher IRS brackets:
- 7th bracket: reduction of the rate from 3% to 15% compared to Portugal’s mainland rate.
- 8th bracket: reduction of the rate from 3% to 9%, compared to Portugal’s mainland rate
- 9th bracket: reduction of the rate from 1% to 3%, compared to Portugal’s mainland rate
These changes reduce the average tax rate in all income brackets, benefiting all households.
Reduction of the General IRC Rate
The IRC rate for the Autonomous Region of Madeira was set at 14%, applying to all entities subject to this tax, including startups. This measure represents a significant tax relief for companies headquartered in the region.
For taxpayers who directly and primarily carry out an economic activity of an agricultural, commercial or industrial nature, and who are classified as a small or medium-sized enterprise (SME) or small-mid-capitalisation company (Small Mid Cap), the IRC rate applicable to the first 50,000 euros of taxable income is 11.2%. The excess is taxed at the general rate of 14% (Regional Legislative Decree No. 2/2025/M).
Conclusion
The tax changes in corporate income tax and corporate income tax in the Autonomous Region of Madeira reflect a tax relief policy, promoting economic competitiveness and increasing the disposable income of families and companies. Of note is the increase in the 30% differential in corporate income tax, the reduction in corporate income tax rates and the maintenance of special tax benefit schemes, consolidating Madeira as a fiscally attractive region in light of Portugal’s Tax Cuts in 2025.
Take Advantage of Madeira’s 2025 Tax Cuts — Act Now
- Whether you’re an individual taxpayer or a growing business, the Autonomous Region of Madeira offers unmatched tax advantages in 2025. With lower IRS rates across more brackets and a reduced IRC rate as low as 11.2% for SMEs, there’s never been a better time to relocate, invest, or expand in Madeira.
- 💼 Are you a business owner? Secure your place in one of Portugal’s most competitive corporate tax environments.
- 👨👩👧👦 Are you a resident or considering a move? Benefit from lower income tax and increased take-home pay.
Don’t miss this window of opportunity. Contact our team today to learn how you can take full advantage of Madeira’s fiscal benefits.
The founding of Madeira Corporate Services dates back to 1996. MCS started as a corporate service provider in the Madeira International Business Center and rapidly became a leading management company… Read more
