Proposed State Budget Law for 2026
PIT
Check PwC’s analysis of the 2026 State Budget, focusing on Personal Income Tax (IRS). Stay informed about all the changes. Have questions? PwC has the answers!
General rates
It is proposed that the thresholds of the progressive PIT rate bands be updated by 3.51%, through application of the automatic mechanism provided for in the legislation.
It is also proposed to reduce the rates for the 2nd to the 5th bands be reduced by 0.3 percentage points.
Accordingly, the general rate table of rates will be as follows:
| PIT rates for 2026 | ||
|---|---|---|
| Taxable Income (€) | Rate | Deduction (€) |
| Up to 8,342.00 | 12.50% | 0.00 |
| Above 8,342.00 up to 12,587.00 | 15.70% | 266.94 |
| Above 12,587.00 up to 17,838.00 | 21.20% | 959.26 |
| Above 17,838.00 up to 23,089.00 | 24.10% | 1,476.45 |
| Above 23,089.00 up to 29,397.00 | 31.10% |
3,092.77 |
| Above 29,397.00 up to 43,090.00 | 34.90% | 4,209.94 |
| Above 43,090.00 up to 46,566.00 | 43.10% | 7,743.27 |
| Above 46,566.00 up to 86.634.00 | 44.60% | 8,441.48 |
| Above 86,634.00 | 48.00% | 11,387.17 |
Minimum subsistence level
It is proposed to update the reference value of the minimum subsistence threshold, level, so as to keep pace with the increase in the guaranteed minimum monthly remunerationwage (RMMG).
Beyond the State Budget, what other measures are on the horizon?
Alongside the 2026 State Budget Law, several initiatives are underway that include tax measures impacting both individuals and businesses. At PwC, we summarise what is already known to help you stay informed.
Housing
Within the scope of initiatives aimed at improving access to housing, the following amendments are being considered:
increase in the cap on the PIT deduction relating to rental expenses to € 900 in 2026 and € 1,000 in 2027;
reduction from 25% to 10% of the PIT rate applicable to rental income from residential rental agreements with moderate rents;
exemption from PIT on capital gains, provided the sale proceeds are reinvested in properties intended for letting at moderate rent levels;
“zero PIT” on rents charged at least 20% below the median for each municipality.
Despite the official announcement, the Bill has not yet been published and, at this stage, it is not possible to determine precisely the terms and conditions of its implementation.
PwC Newsletter: Proposed State Budget Law for 2026
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State Budget 2026 – Everything You Need to Know About the Tax Changes
Follow the tax changes introduced by the Draft State Budget Law for 2026. Have questions? PwC has the answers!
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