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 (%) | Medium Rate (%) |
| 1º | from 7 479 | 10,15 | 10,15 |
| 2º | over 7 479 to 11 284 | 14,7 | 11,684 |
| 3º | over 11 284 to 15 992 | 18,55 | 13,706 |
| 4º | over 15 992 to 20 700 | 19,95 | 15,126 |
| 5º | over 20 700 to 26 355 | 29,75 | 18,264 |
| 6º | over 26 355 to 38 632 | 33,67 | 23,16 |
| 7º | over 38 632 to 50 483 | 42,20 | 27,629 |
| 8º | over 50 483 to 78 834 | 43,65 | 33,391 |
| 9º | over 78 834 | 47,52 | - |
The amount of taxable income, when greater than €7 479, is divided into two parts: one of them being equal to the limit of the 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.
