How IRS withholding on salaries is calculated

What is it for?

On each payslip, fiscaldoo withholds Personal Income Tax (IRS) automatically: it chooses the withholding table from the employee's IRS profile, applies the rate and the deduction (parcela a abater) for the pay bracket, deducts for dependants and rounds. This article shows where each of these values can be seen, which employee data change them and how to check the calculation.

When to use it?

• The employee asks why that amount was withheld.
• One month's IRS differs from the previous month's without the salary having changed.
• The employee handed in a new declaration (marriage, a child, opting for a higher rate, IRS Jovem).
• Too much or too little IRS was withheld on a payslip already validated.

Where to find it?

• On the payslip: Payroll › Process › Payslips › open the payslip › Social security and income tax tab › IRS withholding block.
• The employee's IRS profile: Payroll › Prepare › Pay history › open the employee's line › Payroll tab › IRS declaration and Options and payment.
• The published tables: Payroll › Configure › Social security and income tax › Income tax withholding tables (only the Payroll Administrator).

Before you start

• To read the payslip and the profile, your profile is Payroll Processor or Payroll Administrator. To change the employee's IRS profile, it is Payroll Administrator. To correct the IRS on a validated payslip (Correct the IRS withheld), the profile to use is Payroll Administrator, but today the screen also shows the button to the Payroll Processor, who can open it and record.
• The employee's IRS profile is filled in. Without it, the company's configuration defaults to “Nothing assumed: no IRS is calculated until the worker's IRS profile exists”.

How to use it

1. Open the employee's payslip and the Social security and income tax tab.
2. In IRS withholding, check the data the payslip used: Payment date (IRS) (only filled in after payment), IRS withholding table, Marital status (IRS), Dependents, Dependents with a disability of 60 % or more, Spouse with a disability of 60 % or more, Armed Forces disabled pensioner and Explicitly no IRS withholding.
3. Check the calculation: IRS base (R), Applied IRS bracket, Applied marginal rate (%) (with five decimal places: 22.77000), Deduction (parcela a abater) (289.47000), IRS withheld and Effective rate (%).
4. Read the How was it calculated? text below, which is always visible in this block, to see the full calculation: the table and the order that published it, the bracket, the deduction for dependants, the month's reductions and the rounding.
5. If an employee detail is wrong (marital status, dependants, number of holders), correct it in a new contract version, from the following month (see How to change an employee's salary, which uses the same new version), and recalculate the month's batch, if it has not been validated yet.

The employee data that change the withholding

In the Payroll tab of the file:

• IRS declaration: Tax residence (decides between the mainland, Azores or Madeira tables), Marital status (IRS), Dependents, Civil partnership?, Declaration “married, single holder”, The spouse or partner has income subject to tax (decides between “married, single holder” and “married, two holders”) and the Date of the worker's declaration. Pending validation by a certified accountant: the table each combination of these fields selects.
• Options and payment: IRS Jovem: year of the first benefit, Option for a higher withholding rate, Estimated annual variable remuneration, Pension income (category H), IFICI regime (20 %) and Withhold IRS on income in kind (at the worker's request).

The table is not chosen by hand: the payslip says “Table chosen automatically by the worker's IRS profile in force on date”.

Example. Ana Margarida Pinto (married, single holder, 2 dependants, mainland) earns 2,400.00 €.

• October 2026: table III, bracket “Up to 2,773.00 €”, rate 22.77 %. 2,400.00 € × 22.77 % − 289.47 € − 2 × 42.86 € = 171.29 €, rounded down to the euro: 171.00 € withheld.
• November 2026: the same calculation gives 171.29 €, but How was it calculated? explains: “Paid on 30/11/2026: November 2026 reduction, only 50.00 % of the amount of the tables is withheld (171.29 € → 85.645 €; Despacho n.º 12523-A/2026, de 14 de outubro, …)”. Rounded: 85.00 € withheld.

The meal allowance (129.15 €) does not go into the IRS base in either month. Pending validation by a certified accountant: 2026 tables (Despacho n.º 233-A/2026), November 2026 reduction (Despacho n.º 12523-A/2026), deduction of 42.86 € per dependant, rounding down to the euro (CIRS art. 99.º-E) and exemption limit of the meal allowance.

Reading and checking the withholding does not create journal entries. The IRS withheld reaches the accounts with the payslip and is declared in the monthly remuneration statement (DMR) for the month of payment.

Expected result

• You know which table, bracket, rate, deduction and dependant allowances the payslip used, and the IRS withheld calculation matches How was it calculated?.
• If the profile was corrected, the following month's payslip shows the new table in IRS withholding table.

Important notes

• Where to read the calculation. There are three different places. (1) In the Social security and income tax tab, the IRS withholding block has the How was it calculated? text, always visible, with the full calculation. (2) In the Lines tab, the How was it calculated? button on each pay item (Base remuneration, Meal allowance) opens a window for that pay item only, with the rule and the legal source; IRS has no button on the lines. (3) At the end of the Lines tab, How the amounts were reached is the summary: the November payslip says “IRS: table III of 2026; base 2,400.00 €; rate 22.77 %; amount to deduct 289.47 €; withheld 85.00 €.” and then the “November 2026 reduction (Despacho n.º 12523-A/2026 …): the tables give 171.29 €, but only 50 % of it is withheld on a pay paid on 30/11/2026.”
• IRS on a payslip already validated. The Correct the IRS withheld button opens a window that warns: “The payslip is not edited. The difference is carried by the following payslips of the year: added if too little was withheld, refunded if too much was withheld (never more than the payslip withholds). It cannot go beyond the last withholding period of the year.” It asks for the IRS that was due and the Reason, and records with Register the correction. The payslip then shows the warning “IRS error registered: the IRS withheld was wrong by 12.00; the following payslips of the year carry it (left to correct: 12.00).” and the button disappears. In the example in How to correct a payslip already processed, a September payslip with 17.00 € withheld instead of 29.00 € made the following payslip withhold 8.00 € + 12.00 € = 20.00 €, with “Correction of the IRS … (CIRS art. 98.º n.º 4): 12.00 added.” in the block's How was it calculated?. Pending validation by a certified accountant: adjustment of the withholding in the following months of the same year and the effect on the DMR.
• The withholding is declared in the month of payment. Each payslip's IRS withheld goes into that month's DMR; the submission deadline is in the DMR article.

Common problems

The payslip has no IRS withheld

• Cause 1: the employee has no IRS profile; the company is configured not to assume anything.
• Cause 2: Explicitly no IRS withholding is ticked in the IRS withholding block.
• What to do: check IRS withholding table and How was it calculated? in the IRS withholding block. If the profile is missing, ask the Payroll Administrator to fill it in on a new contract version.

November's IRS is half of October's with the same salary

• Cause: the November 2026 reduction applied by fiscaldoo (50 % of the amount of the tables on payments that month).
• What to do: nothing on the payslip. Explain it to the employee with the How was it calculated? text.