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 gets 15% back too — rent or, only for pre-2012 mortgages, loan interest — and every one of these caps shrinks (or disappears) as your taxable income rises.

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 ones under Articles 78.º-A to 78.º-H of the Código do IRS, each with its own percentage and cap. Four of them cover the everyday spending most households have: general expenses, health, education, and housing. All four work the same way underneath: you (or the person you paid) put your NIF on the invoice, the Autoridade Tributária (AT) tallies it via e-Fatura, and the resulting deduction shows up pre-filled on your Modelo 3.

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 back 15% of health spending by any household member, capped at €1,000 a year. It covers invoices from health-sector providers (doctors, clinics, pharmacies, and specialist opticians and orthopaedic suppliers) that are VAT-exempt or charged at the reduced rate, plus health insurance premiums and contributions to mutual associations that cover health risk — as long as those premiums haven't already been reimbursed by an insurer. Purchases taxed at the standard VAT rate from those same providers also count, but only if backed by a medical prescription that you flag on the portal.

Education expenses

Article 78.º-D gives you back 30% of spending on education and training — nurseries, kindergartens, schools recognised by the national education system, tuition, school meals, and textbooks — capped at €800 a year. There's a specific add-on for a displaced student: if a household member 25 or under is enrolled somewhere more than 50km from the family home, rent for their accommodation counts too, adding up to €400 to the cap (so up to €1,100 total when rent is involved). That rent deduction can't be combined, for the same property, with the housing-related deduction below.

Housing-related expenses

Article 78.º-E also gives back 15%, but which expense qualifies depends on which regime applies to you. If you rent your primary home, your rent counts, up to a base cap of €800 a year — a cap that's being phased upward for lower-income taxpayers under a 2024 law, reaching €900 for 2026 and a planned €1,000 from 2027, and that scales down as your taxable income rises above the lowest bracket. If instead you're still paying off a mortgage contracted on or before 31 December 2011 for your primary home, the interest portion counts too, capped at €296 (up to €450 for lower incomes) — mortgage interest stopped being deductible for contracts signed after that date, so this specific relief is shrinking each year as those older loans get paid off. The rent and interest deductions aren't cumulative with each other.

Why your actual cap may be lower than the headline number

Article 78.º sets an overall ceiling on top of the individual caps above: taxpayers with taxable income at or below the lowest IRS bracket face no combined ceiling at all on most of these deductions; in the middle brackets the ceiling is worked out by a formula that tapers down as income rises; and above a certain income level the combined cap for these deductions is fixed at €1,000, rising by 5% per dependant for households with three or more dependants. Because the euro thresholds for those brackets are set each year in the Orçamento do Estado, we're deliberately not repeating a specific bracket figure here that could be out of date by the time you read this — check your own bracket, and your resulting deduction ceiling, on the Portal das Finanças or its official IRS simulator before you file.

Getting the mechanics right

• Always give your NIF when paying — an invoice issued without it doesn't feed any of these deductions.
• Review your e-Fatura account periodically; a supplier misclassifying an invoice's sector can push it into the wrong deduction (or none at all).
• Expenses incurred outside Portugal can usually still be added manually on the Portal das Finanças, by entering the invoice's key details yourself.
• 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.