IRS Deductions in Portugal: What You Can Actually Deduct

• A 35% deduction on many everyday invoices (up to €250, or 45%/€335 for single-parent households) is tallied automatically from e-Fatura — no separate claim needed.
• Health expenses give you 15% back, capped at €1,000 a year — doctors, pharmacies, and health insurance premiums all count.
• Education costs (school fees, tuition, textbooks) give you 30% back, up to €800, with a rent add-on for displaced students.
• Housing also gives a 15% deduction: eligible permanent-home rent, or interest on qualifying contracts signed by 31 December 2011. In 2026, the ordinary rent-deduction cap is €900, with a higher income-linked limit possible under Article 78.º-E.

Once you're a Portuguese tax resident, most of what reduces your IRS bill isn't a single lump-sum deduction — it's a set of category-specific deductions under the Código do IRS, each with its own percentage, eligible documents and cap. Four cover spending many households have: general expenses, health, education and housing. Most Portuguese invoices feed the AT's calculation when they carry the beneficiary's NIF, but rent receipts and documents reported by public or other exempt entities follow their own reporting routes. Always check the figures made available by the AT before filing Modelo 3.

Have pending invoices or missing totals? Read how to validate e-Fatura and check the final deductions before changing the return.

The e-Fatura general-expenses deduction

This is the broadest one, and the one people notice least because it needs no action beyond quoting your NIF. Under Article 78.º-B, you get back 35% of what any member of your household spent on VAT-eligible invoices — across virtually any sector that isn't already covered by the health, education, or housing categories below — up to a global cap of €250 per taxpayer per year. Single-parent households get a better rate: 45%, capped at €335.

• Applies to invoices communicated to the AT under Decree-Law 198/2012, or issued directly on the Portal das Finanças, with your NIF attached.
• The deduction is calculated automatically by the AT — you don't submit anything extra, but it's worth checking the running total on the e-Fatura portal.
• If you're VAT-registered yourself, only invoices for purchases outside your business or professional activity count.
• You can query the AT's calculation and contest it, if something looks off, by 31 March of the following year.

Health expenses

Article 78.º-C gives you a deduction equal to 15% of eligible health spending by household members, capped at €1,000 a year. It covers qualifying invoices from health-sector providers that are VAT-exempt or charged at the reduced rate, as well as premiums or contributions that cover health risks under the conditions in the article. Standard-rate purchases from the listed health sectors count only when justified by a medical prescription and identified as such on the Portal das Finanças. Any portion reimbursed by an insurer, mutual association or qualifying non-profit is excluded.

Education expenses

Article 78.º-D gives you a deduction equal to 30% of eligible education and training spending — including qualifying nurseries, schools, tuition, school meals, manuals and school books — capped at €800 a year. A household member aged 25 or under studying more than 50 km from the household's permanent home may also qualify as a displaced student. Up to €400 a year of eligible rent can be deducted, and the overall €800 education-deduction cap is increased by €300 where the excess is due to that rent, allowing a maximum overall deduction of €1,100. The same property cannot also support the housing deduction below.

Housing-related expenses

Article 78.º-E also applies a 15% rate, but the eligible expense depends on your arrangement. For eligible permanent-home rent, the ordinary deduction cap is €900 for tax year 2026 under the transitional rule in Decree-Law 97/2026, rising to €1,000 from 2027. Article 78.º-E can produce a higher limit for lower taxable incomes, so use the AT's calculation for your exact cap. Interest on qualifying home loans and related pre-existing arrangements is deductible only where the contract was signed by 31 December 2011; the ordinary interest cap is €296, potentially higher under the article's income-linked formula. The alternatives listed in Article 78.º-E are not cumulative.

Why your actual cap may be lower than the headline number

Article 78.º adds a combined ceiling for health, education, housing and several other categories, but not for the Article 78.º-B general-expenses deduction. Taxpayers at or below the first IRS bracket have no combined ceiling for the categories listed in Article 78.º(7); a formula applies above that and up to the first Article 68.º-A threshold; above that threshold, the combined ceiling is €1,000. For households with three or more dependants, those combined limits rise by 5% for each dependant. This ceiling is separate from each category's own cap, and a deduction can never create a refund beyond tax due. Check the AT's current calculation for your return rather than adding the headline caps together.

Getting the mechanics right

• Always give your NIF when paying. If an invoice was issued without it, you can still register it yourself with its QR code in the e-Fatura app before the February validation deadline (CIRS art. 78.º-B n.º 3).
• Review your e-Fatura account periodically; a supplier misclassifying an invoice's sector can push it into the wrong deduction (or none at all).
• Eligible health and education expenses incurred abroad can be entered through the Portal das Finanças. Housing costs have a narrower rule: only qualifying costs in another EU or EEA state with tax-information exchange can be entered under Article 78.º-E.
• Check the pre-filled figures on your Modelo 3 against the portal's own totals before submitting — the AT's calculation is a starting point, not the final word.