Approval Granted for Income Tax Reduction in Madeira
Madeira, the beautiful Portuguese archipelago, has seen significant tax reforms in recent years, with a focus on stimulating business growth and supporting residents. Here's a breakdown of the key changes and their potential impact.
The most notable change is the reduction in the corporate income tax (CIT) rate, which now stands at 14.7%, a significant decrease from the mainland's standard rate of 21%. This move is aimed at attracting businesses to the autonomous region [5].
When it comes to personal income tax, Madeira follows Portugal's standard progressive brackets, with rates ranging from 13% to 48% in 2025 [2]. However, specific changes exclusive to Madeira, such as tax reduction differentials or adjustments to income tax brackets, are not explicitly detailed.
The end of the Non-Habitual Residency (NHR) regime could potentially lead to higher tax burdens for expats and residents, resulting in reduced disposable income across Portugal, including Madeira [4].
The PSD/CDS-PP Regional Government's bill has extended the maximum 30% tax reduction differential up to the 6th IRS bracket. This extended tax reduction applies to gross salaries up to approximately €3,292 per month, which is more than the minimum wage and above the average wage [6].
The bill also includes measures aimed at easing the tax burden on higher brackets and encouraging increased production and subsequent income [7]. Duarte Freitas, the Regional Finance Secretary, has stated that the bill benefits taxpayers with income up to the 6th IRS bracket [8].
The legislative decree, which was approved unanimously in the final overall vote, also includes a lease worth approximately €7 million. The impact of this lease is said to be "direct and positive" on the disposable income of Madeiran families [9].
In summary, Madeira's main distinct tax reform element is the reduced corporate tax rate of 14.7% (vs. 21% mainland) [5]. For personal income tax, Madeira follows Portugal's standard progressive brackets. However, more specific details about Madeira's tax reduction differential or direct impact figures on income and residents' disposable income are not currently available [2].
As always, for the most accurate and up-to-date information, it's advisable to refer to official announcements from Madeira's regional finance authority.
The tax reforms in Madeira focus on stimulating business growth by reducing the corporate income tax rate to 14.7%, attracting businesses to the region [5]. For personal income tax, Madeira follows Portugal's standard progressive brackets, yet specific changes exclusive to Madeira, such as tax reduction differentials or adjustments to income tax brackets, remain unclear [2].
