Key figures — as of 2026-10-08: National minimum wage set to rise from €920 to €970/month in 2027 (+5.4%) — IRS "mínimo de existência" (tax-free income floor) updated to €13,580/year, up €700 from €12,880 in 2026 — the €970 figure comes from the 2025–2028 Concertação Social wage agreement and was tabled in the OE2027 state budget proposal delivered to Parliament on 8 October 2026 — formal confirmation still requires a decree-law (Decreto-Lei) before it becomes legally binding.
The headline number
Portugal's proposed 2027 state budget (OE2027), delivered to the Assembleia da República on 8 October 2026, confirms what had already been signalled in the tripartite wage agreement: the minimum wage climbs from €920 to €970 a month. The government updates the "mínimo de existência" to €13,580, a threshold that assures IRS exemption for anyone earning up to €970. That link between the two numbers is the real story for anyone on low or entry-level pay in Portugal — a category that includes a large share of foreign workers in hospitality, agriculture, cleaning, construction and junior service roles.
The precise IRS exemption threshold for 2027 will depend on next year's Indexante dos Apoios Sociais (IAS), but the budget proposal already guarantees the reference floor covers at least the new €970 minimum wage. The OE2027 text sets the mínimo de existência as the higher of €13,580 or 1.5 × 14 × IAS. This year the equivalent figure was the higher of €12,880 or 1.5 × 14 × IAS, which worked out to €920.
Why this mechanism exists
The mínimo de existência is an IRS rule guaranteeing full or partial tax exemption for lower earners: the law sets a fixed income level below which taxpayers pay no IRS at all, with a tapered reduction above that. As a general rule, the reference value is updated so that anyone earning the national minimum wage remains exempt from IRS. That's exactly what happened this year, when the floor rose to €12,880 — 14 times the current €920 minimum wage.
In practice, that means a worker on minimum wage doesn't just get a bigger paycheck — they get the raise in full, with no clawback through income tax. The structure assures the minimum exemption value will be, at the very least, equivalent to the annual sum of the guaranteed minimum monthly wage.
GrowIN's own calculation
Run the arithmetic and the symmetry is striking: the minimum wage rises by €50/month, or €700 a year across Portugal's 14 payments (12 months plus holiday and Christmas subsidies). The mínimo de existência rises by exactly the same €700 — from €12,880 to €13,580. That's not a coincidence; it's the formula working as designed. For a foreign worker earning strictly the minimum wage, this means 100% of the nominal raise reaches their take-home pay — none of it is absorbed by higher IRS withholding, because the tax-free floor moves in lockstep with the wage floor. Workers earning slightly above minimum wage but still under the threshold also benefit, since more of their income now falls into the exempt bracket.
"When Portugal raises the minimum wage, it's effectively raising the tax-free floor by the same amount — foreign workers at entry-level pay keep the whole increase," says GrowIN Portugal Editorial.
The caveat: not law yet
The €970 figure for 2027 is not yet formally approved, even though it appears in the Concertação Social agreement. Turning the increase into law depends on publication of a decree-law in the Diário da República. Until that diploma is published, the legal minimum wage on the mainland remains €920, the value set for 2026. Labour unions UGT and CGTP have pushed for a steeper rise — €1,000 or even €1,100 — while employer confederations have resisted going beyond the agreed €50 step. The next Concertação Social meeting on the private-sector pay track is expected later in October, so the final number could still shift before the decree-law is signed.
The IAS for 2027 also hasn't been published yet; it typically comes out around late December via a portaria in the Diário da República. Until then, the exact IRS exemption ceiling for incomes above minimum wage (which depends partly on the IAS formula) remains provisional.
What this means for foreign workers in Portugal
For non-Portuguese employees paid at or near the minimum wage — a common situation for recent arrivals still building local work history — the practical takeaway is simple: expect your gross pay to rise by roughly €50/month from January 2027 (pending the decree-law), and expect that increase to show up fully in your net salary, since IRS won't bite into it. If you're also filing for family tax credits or checking eligibility for subsidised housing, social support, or minimum-income thresholds tied to the national minimum wage, those reference points move too.
Anyone unsure how the mínimo de existência interacts with their specific tax situation — especially freelancers on recibos verdes, who follow different withholding rules — should check current figures on the Autoridade Tributária's Portal das Finanças or get a professional read before filing. Our /tax-and-nif/ hub tracks IRS brackets, filing deadlines and NIF procedures as they're confirmed for 2027.
What to watch next
The decisive moment is publication of the wage decree-law, expected before the end of 2026, alongside the IAS portaria. Until both are published, treat €970 and €13,580 as the government's firm planning figures — not yet binding law.
GrowIN Portugal will update this guide once the decree-law and the 2027 IAS are formally published.