Marginal Tax Rate

The marginal tax rate is the IRS rate applied to the highest portion of a taxpayer's income — i.e., the rate on the last euro earned. Portugal's progressive brackets mean that lower income is taxed at lower rates, and each additional euro above a threshold moves into the next bracket. In 2026, the top marginal rate is 48%, applied to income above approximately €80,000 (exact threshold set annually). On top of this, the solidarity surcharge adds 2.5% on income between €80,000 and €250,000, and 5% above €250,000 — bringing the top combined marginal rate to 53%. Knowing the marginal rate is important when deciding whether to elect englobamento for Category E or F income, or when evaluating the benefit of deductions.